This study overcomes the near-infrared (NIR) limitation of MoSâ‚‚ through a synergistic strategy of incorporating sulfur vacancies (VS) and neodymium (Nd3+) doping. Hydrothermally synthesized Nd:MoS2 nanosheets exhibit a drastically reduced optical bandgap from 1.28 eV to 0.45 eV, a doubling of photoluminescence (PL) intensity, and a newly acquired nonlinear optical (NLO) response at 1064 nm. This approach enables intensity-dependent switching between saturable absorption (SA) and reverse saturable absorption (RSA), while also enhancing the RSA effect at 532 nm. Femtosecond transient absorption spectroscopy and density functional theory (DFT) calculations reveal that the synergy between Nd3+ energy levels and VS defect states shortens the carrier trapping time (τ1) to 1.2 ps and prolongs the non-radiative recombination lifetime (τ2) to 84.8 ps. This process drives a shift in the NLO mechanism from ground-state to excited-state absorption, underpinning the novel NIR RSA effect. The work provides critical insights for designing advanced NIR photonic devices such as optical limiters and switches.