Limestone has been widely used to remove SO2 from circulating fluidized bed (CFB) boilers. As the main component of limestone, CaCO3 first undergoes calcination to CaO, which is then sulfated by SO2 to form CaSO4 in the furnace. Water vapor accounts for a high concentration in coal-fired CFB furnaces, which could influence CaO sulfurization. This work aims to understand this issue. Sulfurization experiments were conducted with the CaO calcined from a natural limestone in a laboratory-scale fluidized bed reactor. Scanning electron microscopy, a mercury injection apparatus along with a N-2 adsorption instrument, and X-ray diffraction were employed to test the micromorphology, pore structure, and crystal structure of the sulfurization products, respectively. The results show that CaO sulfurization was improved by water vapor. In addition, an optimum amount of water vapor exists to achieve maximum sulfurization. The results of micromorphology results indicate that sintering, fusion, and growth of grains of sulfurization products were improved by water vapor. The testing results of pore structure show that the pores whose size ranges from 2 to 100 nm will partially or completely change to be larger than 100 nm in the presence of water vapor. The mechanisms can be uncovered in terms of the crystal structure: the diffusion of solid-state ions for both reactant CaO and product CaSO4 is enhanced by water vapor, and the former belongs to surface diffusion without influencing the crystal structure, while the latter is more inclined to volume diffusion because crystal defects are formed due to water vapor.