In this paper, an in situ Raman spectroscopic study of benzothiophene (BT) and its desulfurization under alkaline hydrothermal conditions is reported. The Raman spectrum of BT was obtained. Based on results of Raman in situ observations combined with GC/MS analyses, the mechanism of desulfurization was investigated. Benzothiophene was desulfurized via a two-step process involving (1) the hydrogenation of benzothiophene at the C2 and C3 positions to produce 2,3-dihydrobenzothiophene and (2) the cleavage of the benzene ring-S bond and the C2-S bond to form aromatic products, i.e., ethylbenzene and toluene. The present study provides deep insights into the pathway of BT desulfurization, which is of great significance for developing new methods for the desulfurization of BT using hydrothermal reactions, and will also contribute to the Raman spectroscopic database.