This paper presents a review on the selected highlights of highly-functional devices in two-dimensional photonic crystals slab structure. By introducing artificial defects in the photonic crystals (that is, defect engineering), novel photonic devices of line-defect waveguides and point-defect nanocavity are demonstrated. For more efficient manipulation of photons, the fundamentals of heterostructure photonic crystals are also reviewed. Heterostructures consist of multiple photonic crystals with different lattice-constants and they provide further high-functionalities such as multiple wavelength operation while maintaining optimized performance and the enhancement of photon manipulation efficiency. Because of the importance of high quality (Q) nanocavity for realization of nanophotonic devices, we also review the design rule of high Q nanocavities and present recent experiments on nanocavities with Q factors in excess of one million (similar to 1.2 x 10(6)). The progress of defect engineering and heterostructure in two-dimensional photonic crystals slab structure will accelerate development in ultrasmall photonic chips, cavity quantum electrodynamics, optical sensors,