Sulfidated zero-valent iron (SZVI) has been recognized for its enhanced reactivity in heavy metal remediation, yet its efficacies and mechanisms for sequestering thallium (Tl) from wastewater are not well understood. This study aimed to address this knowledge gap by synthesizing SZVI through one-step (OS) and two-step (TS) methods, using varying sulfur-to-iron (S/Fe) molar ratios. Results revealed that high S/Fe ratios in the OS method yielded SZVI with low crystallinity and irregular morphology, whereas the TS method produced SZVI with more crystalline and core-shell structure. Both OS and TS methods, particularly at high S/Fe ratios (2.0 for OS and 3.0 for TS), demonstrated high Tl removal capacities—645.16 mg/g for OS-2.0 and 510.20 mg/g for TS-3.0, respectively. These formulations effectively reduced Tl(I) concentrations in simulated wastewater containing complex matrixes and in industrial wastewater with intricate metal(loid) pollutants. Spectroscopic analyses, including X-ray photoelectron and ⁵⁷Fe Mössbauer spectroscopy, identified three primary mechanisms for Tl sequestration: chemical precipitation facilitated by various sulfidized iron species (FeS_x) as Tl₂S, surface complexation through iron oxyhydroxide and FeS_x, and electrostatic attraction to the negatively charged SZVI surface. The study confirmed that SZVI, when synthesized at high S/Fe ratios with elevated sulfides content, served as an efficient medium for remediating Tl-contaminated wastewater.