van der Waals heterostructures have emerged as an ideal platform for creating engineered artificial electronic states. While vertical heterostructures have been extensively studied, realizing high-quality lateral heterostructures with atomically sharp interfaces remains a major experimental challenge. Here, we advance a one-pot two-step molecular beam lateral epitaxy approach and successfully synthesize atomically well-defined 1T-VSe2─1H-NbSe2 lateral heterostructures. We demonstrate the formation of defect-free lateral heterostructures and characterize their electronic structure by using scanning tunneling microscopy and spectroscopy together with density functional theory calculations. We find additional electronic states at the 1D interface as well as signatures of Kondo resonances in a side-coupled geometry. Our experiments explored the full potential of lateral heterostructures for realizing exotic electronic states in low-dimensional systems for further studies of artificial designer quantum materials.