Lithium-sulfur (Li–S) battery system shows immense potential as energy storage devices with high energy density. However, the soluble property of polysulfides into the electrolyte during charge/discharge process leads to low sulfur utilization, severe polarization and short cyclic life, which has been a serious obstacle for practical application. How to anchor the polysulfides onto the cathode materials and moreover, enhance its further conversion to the final products, have been important challenges for the utilization of Li–S batteries. Herein, a novel well crystallized nanosized Fe7S8 possessing of a high specific surface area of 55.6 m2 g−1 fabricated by a simple microwave-assisted method combined with high temperature pyrolysis technique, is introduced into the S/C composite cathode for the first time. Strong interaction between polysulfides and the Fe7S8 can be realized to relieve the shuttle effect. The redox reaction of polysulfides can also be promoted to reduce electrode polarization. As a result of the enhanced utilization of sulfur, the optimized S@GFS-15 electrode may deliver a high initial discharge capacity of 1307.2 mA h g−1 at 0.1 C (1 C = 1675 mA h g−1) and low decay rates of 0.047% and 0.037% per cycle after 1000 cycles at 1 and 2 C respectively when the sulfur loading is ordinary 1.1 mg cm−2. Even the sulfur loading rises up to 2.6 mg cm−2, a large initial discharge specific capacity of 1134.5 mA h g−1 can be achieved at 0.1 C. After 600 cycles, the specific capacity of 457.3 mA h g−1 with a relatively small average decay rate of 0.062% per cycle can be obtained. Thus, incorporation of the nanosized Fe7S8 with graphene can help to achieve effective performance improvement route for Li–S batteries.