Thermal reaction of 1,8-diketone in presence of Lawesson's reagent (LR) or P4S10 under toluene reflux condition provided expected fused five-membered thiophene and dithiin compounds along with 2,4-diphenylthiophene (2,4-DPT), 2,5-diphenylthiophene (2,5-DPT) and 3,6-diphenylthieno[3,2-b][1,4]dithfine (3,6-DPTDT). DFT level computations conducted to shed light on this intriguing mechanism indicate in situ generation of phenylthiirene from phenylthiiran analogue, which leads to the formation of the 2,4-DPT and 2,5-DPT based on the literature. Phenylthiiran undergoes successive intramolecular reactions yielding a precursor 3-phenyl-1,2-dithiete, which renders 2,5- and 2-6-diphenyl-1,4-dithiin. These 1,4-dithiins result in 2,4-DPT and 2,5-DPT by overcoming relatively high activation barriers. On the other hand, acid catalyzed ring opening reactions of two phenylthiirenes followed by intramolecular reactions yield the 2,4-DPT and 2,5-DPT. Formation of the fused five-membered thiophene and 3,6-DPTDT takes place in successive reactions of 1,4-dithiin. These results decipher the intricate mechanism of thermal reaction of 1,8-diketone in presence of P4S10.