We consider p-dimensional defects in D-dimensional conformal field theories (CFTs) and construct defect localized entropy by performing the replica trick only on the defect while keeping the bulk intact. The defect localized entropy is a measure of entanglement between the degrees of freedom localized on the defect. We show that at the fixed point of defect renormalization group (RG) flow, defect localized entropy is equal to minus defect free energy for universal part. We construct defect C-functions in various dimensions and provide a proof of the monotonicity for p=2,3.