Sulfur in coal is derived primarily from two sources: the original plant materials and ambient fluids in the coal-forming environment. Abundance of sulfur in coals is controlled by depositional environments and the diagenetic history of the coal seams and overlying strata. The seawater interaction with the peat results in elevated levels of sulfur in coals. Low-sulfur coal seams, such as the Tertiary coals in the Powder River Basin, were deposited in an alluvial environment and the peat was not influenced by seawater. The sulfur in these low-sulfur coals is derived mostly from its parent plant materials. In contrast, high-sulfur coal seams are generally associated with marine strata. For example, the Herrin Coal in the Illinois Basin is predominantly high-sulfur, and the seam is mostly overlain by the marine Anna Shale and Brereton Limestone. The rare, yet characteristically superhigh-organic-sulfur (SHOS) coal of Guidin, Guizhou, China, was deposited during the Late Permian on a carbonate platform where there was plenty of seawater sulfate but a lack of iron.

In the formation of high-sulfur coal, seawater sulfate diffuses into peat and is reduced by microorganisms to hydrogen sulfide, elemental sulfur and polysulfides. During early diagenesis in a reducing environment, ferric iron is reduced to ferrous iron, which reacts with hydrogen sulfide to form iron monosulfide. Iron monosulfide is later transformed by reaction with elemental sulfur into pyrite. Organic sulfur is formed by reaction of reduced sulfur species with the premaceral humic substances formed by bacterial decomposition of the peat. Organic sulfur species in coals are mainly thiols, sulfides, disulfides, and thiophene and its derivatives. The thiophenic fraction of organic sulfur increases with the carbon content of coals. Organic sulfur compounds formed in peat are mostly thiols and sulfides, which gradually convert to thiophenes with increasing coal maturation. Thus, the organic sulfur species in coal evolve during the history of coal formation.