The crystal structure of layered metal IrTe2 is determined using single-crystal x-ray diffraction. At T=220 K, it exhibits Ir and Te dimers forming a valence-bond crystal. Electronic structure calculations reveal an intriguing quasi-two-dimensional electronic state, with planes of reduced density of states cutting diagonally through the Ir and Te layers. These planes are formed by the dimers exhibiting a signature of covalent bonding character development. Evidence for significant charge disproportionation among the dimerized and nondimerized Ir (charge order) is presented. We argue that the structural transition is driven by the Ir dimerization and bonding, while electronic correlations (dynamical mean field theory corrections to density functional theory) and spin orbit coupling play a secondary role.