Layered lead halides offer potential for lightemitting and photovoltaic devices. Here, we report the synthesis of two-dimensional (2D) lead iodide with single-octahedra slabs separated by the smallest organic cation used to date in the construction of A 2 PbI 4 compounds. This compound, MHy 2 PbI 4 , where MHy + denotes methylhydrazinium cation, shows exceptionally short separation of adjacent lead iodide layers and strong N− H•••I hydrogen bonds as well as unusually small interoctahedral tilting of PbI 6 octahedra, leading to exceptionally small band gap of 2.20 eV. Photoluminescence (PL) studies show that this compound exhibits at room temperature two emission bands at 561 and 610 nm related to free exciton and bound exciton. The latter one exhibits blue shift on cooling by around 37 nm in the 80− 300 K range. As a result, PL of MHy 2 PbI 4 changes strongly with temperature from yellowish pink at 300 K to yellow-green at 80 K. MHy 2 PbI 4 undergoes three structural phase transitions. The first phase transition occurs at 320 K, and it does not show any evident change of Pmmn symmetry. The second phase transition that occurs at 298 K is associated with ordering of the MHy + cations and change of symmetry to Pccn. This phase transition leads also to pronounced steplike change of dielectric permittivity. Structural investigation indicates that major reorientation of MHy + cations and tilts of PbI 6 octahedra contribute to this switchable dielectric property. The third phase transition observed at 262 K (233 K) on cooling (heating) leads to distortion of the structure to triclinic, space group P1̅ . MHy 2 PbI 4 shows a low value of direct current conductivity σ DC at low temperatures, but the conductivity increases rapidly with increasing temperature and reaches 1.02 × 10 −7 S m −1 at 298 K. We also report temperature-dependent Raman scattering of MHy 2 PbI 4 . Analysis of Raman data revealed clear shifts and changes in bandwidths at the phase transitions that provided deeper insight into mechanisms of the structural phase transitions in this material. An interesting feature of the studied perovskite is also unusually large broadening of many bands on heating the sample from 80 to 300 K that is much larger than typically observed in A 2 PbI 4 compounds. This behavior proves that lattice dynamic effects play very important role in MHy 2 PbI 4 and that the nature of organic cation has a great impact on the lattice dynamics of 2D perovskites.