Monolayer group V transition metal dichalcogenides in their 1T phase have recently emerged as a platform to investigate rich phases of matter, such as spin liquid and ferromagnetism, resulting from strong electron correlations. Newly emerging 1T-NbSe2 has inspired theoretical investigations predicting collective phenomena such as charge transfer gap and ferromagnetism in two dimensions; however, the experimental evidence is still lacking. Here, by controlling the molecular beam epitaxy growth parameters, we demonstrate the successful growth of high-quality single-phase 1T-NbSe2. By combining scanning tunneling microscopy/spectroscopy and ab initio calculations, we show that this system is a charge transfer insulator with the upper Hubbard band located above the valence band maximum. To demonstrate the electron correlation resulted magnetic property, we create a vertical 1T/2H NbSe2 heterostructure, and we find unambiguous evidence of exchange interactions between the localized magnetic moments in 1T phase and the metallic/superconducting phase exemplified by Kondo resonances and Yu-Shiba-Rusinov–like bound states.