This study addresses the persistent challenge of polysulfide dissolution in lithium–sulfur (Li–S) batteries by introducing magnesium oxide (MgO) nanoparticles as a novel additive. MgO was integrated with sulfur using a scalable process involving solid-state melt diffusion treatment followed by planetary ball milling. XRD measurements confirmed that sulfur (S₈) retains its orthorhombic crystalline structure (space group $F_{ddd}$) following the MgO incorporation, with minimal peak shifts indicating slight lattice distortion, while the increased peak intensity suggests enhanced crystallinity due to MgO acting as a nucleation site. Additionally, Raman spectroscopy demonstrated sulfur’s characteristic vibrational modes consistent with group theory (point group $D_{2}h$) and highlighted multiwalled carbon nanotube (MWCNT′s) D, G, and 2D bands, with a low I_D/I_G ratio (0.47), which indicated low defects and high crystallinity in the prepared cathode. The S–MgO composite cathode exhibited superior electrochemical behavior, with an initial discharge capacity (950 mA h g⁻¹ at 0.1 C), significantly improved compared to pristine sulfur’s. The presence of MgO effectively mitigated the polysulfide shuttle effect by trapping polysulfides, leading to enhanced stability over 400 cycles and the consistent coulombic efficiency of over 99.5%. After 400 cycles, EDS and SEM analyses confirmed the structural integrity of the electrode, with only minor fractures and slight sulfur content loss. Electrochemical impedance spectroscopy further confirmed the enhanced performance.