We report an order-disorder phase transition in the 2D semiconductor KAg3Se2, which is a dimensionally reduced derivative of 3D Ag2Se. At similar to 695 K, the room temperature beta-phase (CsAg3S2 structure type, monoclinic space group C2/m) transforms to the high temperature a-phase (new structure type, hexagonal space group R (3) over barm, a = 4.5638(5) A, c = 25.4109(6) A), as revealed by in situ temperature-dependent X-ray diffraction. Significant Ag+ ion disorder accompanies the phase transition, which resembles the low temperature (similar to 400 K) superionic transition in the 3D parent compound. Ultralow thermal conductivity of similar to 0.4 W m(-1) K-1 was measured in the "ordered" beta-phase, suggesting anharmonic Ag motion efficiently impedes phonon transport even without extensive disordering. The optical and electronic properties of beta-KAg3Se2 are modified as expected in the context of the dimensional reduction framework. UV-vis spectroscopy shows an optical band gap of similar to 1 eV that is indirect in nature as confirmed by electronic structure calculations. Electronic transport measurements on beta-KAg3Se2 yielded n-type behavior with a high electron mobility of similar to 400 cm(2) V-1 s(-1) at 300 K due to a highly disperse conduction band. Our results thus imply that dimensional reduction may be used as a design strategy to frustrate order-disorder phenomena while retaining desirable electronic and thermal properties.