Hydrodesulfurization (HDS) reaction can significantly reduce the viscosity and sulfur content of heavy oil, while the HDS reaction mechanism of tetrahydrothiophene as the main sulfide in heavy oil is still unclear. The HDS experiment of tetrahydrothiophene catalyzed by nickel phosphide (Ni2P) is carried out at 200–300 °C. The results indicate that the H2S production under the catalysis of Ni2P increases obviously within 200–250 °C. The main gas products of HDS reaction are butane, butene and H2S. Meanwhile, the mechanism of tetrahydrothiophene catalyzed by Ni2P is analyzed based on Density Functional Theory (DFT). It is revealed that the adsorption model is most stable when tetrahydrothiophene is vertically adsorbed on the V–Ni-Hcp1 site of Ni2P (001). The C–S bond is elongated and the C–C bond is shortened after adsorption. Hydrogenation (HYD) is the most possible reaction route of tetrahydrothiophene on Ni2P (001) surface. There are two routes with the lowest activation energy, which are C4H8S→C4H8SH∗→C4H9SH∗→C4H10+H2S and C4H8S→C4H9S∗→C4H9∗+SH∗→C4H10+H2S. Butane and H2S are produced in the reaction, corresponding to the experimental results. This study provides a basis for understanding of the HDS mechanism of tetrahydrothiophene catalyzed by Ni2P.