The reactions of benzenethiol on a sulfur-covered Mo(110) surface were studied using temperature programmed reaction, X-ray photoelectron, and high resolution electron energy loss spectroscopies. The sulfur overlayer profoundly alters the kinetics and selectivity for desulfurization and dehydrogenation. By using isotopic labeling, we have established that phenyl disulfide (C6H5S-S-) is formed via S-H bond scission and S-S bond formation on Mo(110) at 100 K. The S-S- linkage is oriented perpendicular and the phenyl ring parallel to the surface. The disulfide subsequently forms an upright phenyl thiolate species, bound directly to the Mo(110) surface, prior to the onset of benzene formation at 300 K. In contrast to the clean surface, where only the low-temperature state is observed, a second benzene peak is observed at 500 K on the sulfur-covered surface. This feature is attributed to disproportionation of surface phenyl groups to produce gaseous benzene and surface benzyne. In addition, gaseous phenyl also desorbs from the surface in the same temperature range, due to a lack of available surface hydrogen. The selectivity for gaseous hydrocarbon production is approximately 80%, nearly twice that on the clean surface, while the total amount of reaction remains the same. These effects are attributed to (i) the initial phenyl disulfide formation, which anchors the reactant to the crowded surface, while preventing low-temperature decomposition, and (ii) stabilization of higher temperature intermediates, such as phenyl thiolate, surface phenyl, and benzyne (all of which possess a predominantly perpendicular ring orientation), by site-blocking by the sulfur overlayer.