We developed hydrogen iodide (HI) reduction of rGO and surfactant-assisted chemical reaction- deposition method to form hybrid material of sulfur (S) encapsulated in reduced graphene oxide (rGO) sheets for rechargeable lithium batteries. The surfactant-assisted chemical reaction–deposition method strategy provides intimate contact between the S and graphene oxide. Chemical reduced rGO with high conductivity as carbon coating layer prevented the dissolution of polysulfide ions and improved the electron transfer. This novel core–shell structured S@rGO composites with high S content showed high reversible capacity, good discharge capacity retention and enhanced rate capability used as cathodes in rechargeable Li/S cells. We demonstrated here that an electrode prepared from a S@rGO with up to 85 wt% S maintains a stable discharge capacity of about 980 mAh g−1 at 0.05 C and 570 mAh g−1 at 1C after 200 cycles charge/discharge. These results emphasize the importance of rGO with high electrical conductivity after HI-reduced rGO homogeneously coating on the surface of S, therefore, effectively alleviating the shuttle phenomenon of polysulfides in organic electrolyte. Our surfactant-assisted chemical reaction-HI reduction approach should offer a new technique for the design and synthesis of battery electrodes based on highly conducting carbon materials.