Two-dimensional (2D) ZnO nanosheets with highly-concentrated Zn vacancies (VZn) of up to approximately 33% were synthesized by ionic layer epitaxy at the water-toluene interface. This high cation vacancy concentration is unprecedented for ZnO, and may provide unique opportunities to realize exotic properties not attainable in the conventional bulk form. After annealing, the nanosheets showed characteristic magnetic hysteresis with saturation magnetization of 57.2 emu/g at 5 K and 50.9 emu/g at room temperature. This value is one order of magnitude higher than other ZnO nanostructures and comparable to the conventional ferromagnetic Fe3O4. Density functional theory calculations, with the support of experimental results, suggests that a high concentration of VZn (approximately one-third of the Zn sites) can form spontaneously during synthesis when stabilized by H ions, and the formation of VZn could be further facilitated by the presence of grain boundaries. It is essential to remove the H for the nanosheets to show ferromagnetism. The mechanisms identified for the origin of the high magnetism in ZnO nanosheets presents an intriguing example of a kinetically-stabilized, non-equilibrium, highly defective 2D nanomaterial with a significantly enhanced physical property.