Abstract: The effects of Yunnan coal as a reducing agent and the desulfurizer SH on the improvement in iron grade and the desulfurization of a sulfuric acid residue were investigated in direct reduction and roasting processes. The mechanisms of action of Yunnan coal and the desulfurizer SH were analyzed by X-ray diffraction and scanning electron microscopy. It is shown that in the high-temperature reducing atmosphere, volatile elemental sulfur and carbonyl sulfur, metallic iron and nonmagnetic troilite are produced from pyrite in the residue. Magnetite and hematite in the residue are reduced into iron. In the roasting process of the residue, Yunnan coal has obvious desulfurization effect; however it cannot meet the requirement. The addition of the desulfurizer SH can reduce sulfur further more. Its mechanism of action is that in the direct reduction and roasting processes, the desulfurizer and pyrite generate iron and calcium sulfide without magnetic, which can be separated by a grinding and magnetic method, so the aim of desulfurization is reached.