The iodohydroxylation of 1,2-allenyl sulfoxides with iodine in the presence of benzyl thiol afforded 3-hydroxy-2-iodo-2(E)-alkenyl sulfides in good yields and high regio- and stereoselectivities. In this reaction it was observed that the sulfoxide functionality was reduced to sulfide and the water in the reaction mixture plays an important role for the stereoselectivity observed. A mechanism involving the attack of benzyl thiol at the positively charged sulfur atom in the five-membered intermediate 2 has been proposed.