Realizing multicolored luminescence in two-dimensional (2D) nanomaterials would afford potential for a range of next-generation nanoscale optoelectronic devices. Moreover, combining fine structured spectral line emission and detection may further enrich the studies and applications of functional nanomaterials. Herein, a lanthanide doping strategy has been utilized for the synthesis of 2D ZnSe:Er3+ nanosheets to achieve fine-structured, multicolor luminescence spectra. Simultaneous upconversion and downconversion emission is realized, which can cover an ultrabroadband optical range, from ultraviolet through visible to the near-infrared region. By investigating the low-temperature fine structure of emission spectra at 4 K, we have observed an abundance of sublevel electronic energy transitions, elucidating the electronic structure of Er3+ ions in the 2D ZnSe nanosheet. As the temperature is varied, these nanosheets exhibit tunable multicolored luminescence under 980 and 365 nm excitation. Utilizing the distinct sublevel transitions of Er3+ ions, the developed 2D ZnSe:Er3+ optical temperature sensor shows high absolute (15.23% K-1) and relative sensitivity (8.61% K-1), which is superior to conventional Er3+-activated upconversion luminescent nanothermometers. These findings imply that Er3+-doped ZnSe nanomaterials with direct and wide band gap have the potential for applications in future low-dimensional photonic and sensing devices at the 2D limit.