In this work, a new nanocatalyst, Fe2W18Fe4@NiO@CTS, was synthesized by the reaction of sandwich‐type polyoxometalate (Fe2W18Fe4), nickel oxide (NiO), and chitosan (CTS) via sol–gel method. The assembled nanocatalyst was systematically characterized by FT‐IR, UV–vis, XRD, SEM, and EDX analysis. The catalytic activity of Fe2W18Fe4@NiO@CTS was tested on oxidative desulfurization (ODS) of real gasoline and model fuels. The experimental results revealed that the levels of sulfur content and mercaptan compounds of gasoline were lowered with 97% efficiency. Also, the Fe2W18Fe4@NiO@CTS nanocatalyst demonstrated an outstanding catalytic performance for the oxidation of dibenzothiophene (DBT) in the model fuel. The major factors that influence the desulfurization efficiency and the kinetic study of the ODS reactions were fully detailed and discussed. The probable ODS pathway was proposed via the electrophilic mechanism on the basis of the electrophilic characteristic of the metal‐oxo‐peroxo intermediates. The prepared nanocatalyst could be reused for 5 successive runs without any appreciable loss in its catalytic activity. As a result, the current study suggested the potential application of the Fe2W18Fe4@NiO@CTS hybrid nanocatalyst as an ideal candidate for removal of sulfur compounds from fuel.