Engineering electronic bandgaps is crucial for applications in information technology, sensing, and renewable energy. Transition metal dichalcogenides (TMDCs) offer a versatile platform for bandgap modulation through alloying, doping, and heterostructure formation. Here, the synthesis of a 2D MoxW1-xS2 graded alloy is reported, featuring a Mo-rich center that transitions to W-rich edges, achieving a tunable bandgap of 1.85 to 1.95 eV when moving from the center to the edge of the flake. Aberration-corrected high-angle annular dark-field scanning transmission electron microscopy showed the presence of sulfur monovacancy, VS, whose concentration varied across the graded MoxW1-xS2 layer as a function of Mo content with the highest value in the Mo-rich center region. Optical spectroscopy measurements supported by ab initio calculations reveal a doublet electronic state of VS, which is split due to the spin-orbit interaction, with energy levels close to the conduction band or deep in the bandgap depending on whether the vacancy is surrounded by W atoms or Mo atoms. This unique electronic configuration of VS in the alloy gave rise to four spin-allowed optical transitions between the VS levels and the valence bands. The study demonstrates the potential of defect and optical engineering in 2D monolayers for advanced device applications.