The role of crystal defects in wide bandgap semiconductors and dielectrics under extreme environments (high temperature, high electric and magnetic fields, intense radiation, and mechanical stresses) found in power electronics is reviewed. Understanding defects requires real-time in situ material characterization during material synthesis and when the material is subjected to extreme environmental stress. Wide bandgap semiconductor devices are reviewed from the point of view of the role of defects and their impact on performance. It is shown that the reduction of defects represents a fundamental breakthrough that will enable wide bandgap (WBG) semiconductors to reach full potential. The main emphasis of the present review is to understand defect dynamics in WBG semiconductor bulk and at interfaces during the material synthesis and when subjected to extreme environments. High-brightness X-rays from synchrotron sources and advanced electron microscopy techniques are used for atomic-level material probing to understand and optimize the genesis and movement of crystal defects during material synthesis and extreme environmental stress. Strongly linked multi-scale modeling provides a deeper understanding of defect formation and defect dynamics in extreme environments.