An environmentally benign and highly efficient procedure has been developed for the direct one-pot synthesis of beta-hydroxysulfides in good yields under neutral conditions from alkenes and thiophenols in the presence of aerial oxygen using beta-cyclodextrin in water. This protocol tolerates a wide variety of functional groups or substrates and does not require the use of either acid or base catalysts. beta-Cyclodextrin can be recovered and reused for a number of runs without any loss of activity.