Arc basalts with high H2O content are expected to evolve into highly hydrated felsic melts saturated with aqueous fluids at lower crustal pressures, which are potentially important in providing sulfur (S) and metals for porphyry deposit formation. However, the role of such highly hydrated and fluid-saturated magmas in the transfer of S (and metals) remains rarely studied. To investigate the S dissolution capacity of highly hydrated felsic magmas saturated with fluids at the lower crustal conditions, this study performed experiments with dacite + 10 wt% FeS at H2O contents of 10, 15, and 20 wt%. All the experiments were performed in piston-cylinder apparatus at 1.0 GPa and 950 °C with fO2 conditions imposed by the following solid-state buffers: cobalt-cobalt oxide (CCO), nickel-nickel oxide (NNO), rhenium-rhenium oxide (RRO), MnO-Mn3O4 (MMO), and hematite-magnetite (HM), resulting in a fO2 range of FMQ−1.5 to FMQ+3.3 log units (FMQ = fayalite + magnetite + quartz oxgen buffer). The experimental results show that the H2O content in the felsic melt, in addition to fO2 and melt composition, has a strong effect on the concentration of S in the silicate melt at sulfide ± anhydrite saturation. At a given fO2, the S concentration in the melt increases with increasing H2O content (hydration), resulting in a S concentration of up to ∼8000 ppm in the highly hydrated dacitic melts at fO2 ∼ FMQ+2. We found that high melt hydration at an intermediate fO2 not only dramatically increases sulfide and anhydrite solubilities in the dacitic melts but also promotes the saturation of S-rich fluids. The S concentration in the fluid that corresponds to the highest measured S concentrations in the melt (∼8000 ppm) are ∼5 wt%. These results show that highly hydrated felsic magmas saturated with fluids have a high capacity for S dissolution. Therefore, injection of such fluid-saturated magmas from lower crustal to shallow magma reservoirs is a potential mechanism for the effective transport of S (and perhaps metals) to facilitate subsequent porphyry ore deposit formation.