On a single crystal of CeTe2 with a layered tetragonal structure, we have studied the effect of magnetic field on magnetic susceptibility M/B, specific heat C, and electrical resistivity rho. it is confirmed that this compound orders antiferromagnetically at T-N=4.4K, while rho>(*) over bar * (T) shows no anomaly at T-N but a sharp peak at T-rho=6.1K. Below T-rho, M/B rises suddenly for B parallel toc, the easy magnetization axis, suggesting the onset of a short-range ferromagnetic order. At 2 K, M(B parallel toc) shows a metamagnetic transition at a small field of 0.06 T from the antiferromagnetic ground stare to a field-induced ferromagnetic state. The peak in C(T) shifts from 4.3 K in zero field to 4.0 K in B-parallel toC=0.1 T, and furthermore a shoulder appears at 4.3 K. With increasing magnetic field, the shoulder changes to a broadened maximum, which shifts towards higher temperatures. These observations indicate that the ferromagnetic interaction competes with the antiferromagnetic one even in zero Field. A large negative magnetoresistance, MR=[rho>(*) over bar * (B)-rho>(*) over bar * (0)]/rho>(*) over bar * (0), was observed in the vicinity of T-rho. For I parallel toc, the MR amounts to -25% at 3 T for B parallel toc, which is twice that for B perpendicular toc. The large MR for I parallel tob parallel toc is a result or. the increase of the c-axis conduction in the field-induced ferromagnetic alignment of Ce spins. However, the MR for I perpendicular toc is essentially the same for B parallel toc and B perpendicular toc, suggesting the confinement of carriers within the Te sheet sandwiched hy the ferromagnetically coupled CeTe layers.