In this study, the sulfur behavior of coal and ash were investigated in the coal staged conversion process coupling coal pyrolysis and residue char combustion. The mixture of XLT lignite and its ash with high sulfur content were pyrolyzed first, and then the pyrolyzed ash and the char underwent combustion in a fixed bed reactor, respectively. The presence of coal ash was found to decrease the total sulfur and organic sulfur retained in the char at whole pyrolysis temperatures. The mechanism of the organic sulfur decrease at different temperatures was discussed. The carbon and pyrolyzed gas during XLT lignite pyrolysis could greatly facilitate the ash sulfur (CaSO4) decomposition. SO2 evolution from pyrolyzed ash combustion was far higher than that from char combustion. Both FeSx and CaS due to ash sulfur (CaSO4) decomposition played an important part in SO2 release during pyrolyzed ash combustion. Higher SO2 release during pyrolyzed ash oxidization was observed at higher combustion temperatures, and the possible reason was that elevating temperatures could enhance SO2 release due to CaS oxidization.