The saturable absorber of niobium diselenide (NbSe2), with a wide working bandwidth and excellent nonlinear optical response, was prepared using liquid-phase exfoliation. Its saturation intensity and modulation depth were 5.35 MW/cm2 and 6.3%, respectively. Stable mode-locking with a center wavelength of 1558.7 nm of an erbium-doped fiber laser based on a NbSe2 saturable absorber was successfully achieved. The maximum average output power of the mode-locked laser was 6.93 mW, with a pulse width of 1.3 ps and a repetition rate of 25.31 MHz at a pump power of 550 mW. The results show that NbSe2 is a promising photoelectric modulation material owing to its excellent nonlinear optical properties.