A composite multilayer consisting of semiconducting CdS distributed in Cd-arachidate/arachidic acid layers was prepared by exposing the precursor Cd-arachidate multilayers to H2S. The structures of the precursor multilayers and the modified multilayers were studied by grazing incidence reflection/diffraction using X-rays from a conventional generator and a synchrotron source. The formation of CdS in arachidic acid/Cd-arachidate composite multilayers resulted in the introduction of a new layered structure with a period of 4.37 nm compared to the precursor multilayer period of 5.55 nm. The reduction in the period of the multilayers is consistent with the observation of a tilted structure found in alkanethiol and H2S exposed Cd-stearate multilayers. The lateral morphology of CdS which is replicated between the successive layers in the vertical direction is different when compared to the head group morphology in the precursor multilayer. The molecular arrangement in the plane of the Cd-arachidate precursor multilayer is found to be orthorhombic while the CdS molecules in the modified multilayer are arranged in a hexagonal array. The lateral size of the CdS domains/particles is found to be similar to 13 nm, at least an order of magnitude greater than the layer thickness. This clearly indicates that the CdS particles are quasi-2D in nature and are disk shaped.