Magnetism in recently discovered van der Waals materials has opened several avenues in the study of fundamental spin interactions in truly two-dimensions. A paramount question is what effect higher-order interactions beyond bilinear Heisenberg exchange have on the magnetic properties of few-atom thick compounds. Here we demonstrate that biquadratic exchange interactions, which is the simplest and most natural form of non-Heisenberg coupling, assume a key role in the magnetic properties of layered magnets. Using a combination of nonperturbative analytical techniques, non-collinear first-principles methods and classical Monte Carlo calculations that incorporate higher-order exchange, we show that several quantities including magnetic anisotropies, spin-wave gaps and topological spin-excitations are intrinsically renormalized leading to further thermal stability of the layers. We develop a spin Hamiltonian that also contains antisymmetric exchanges (e.g., Dzyaloshinskii–Moriya interactions) to successfully rationalize numerous observations, such as the non-Ising character of several compounds despite a strong magnetic anisotropy, peculiarities of the magnon spectrum of 2D magnets, and the discrepancy between measured and calculated Curie temperatures. Our results provide a theoretical framework for the exploration of different physical phenomena in 2D magnets where biquadratic exchange interactions have an important contribution.