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The principle of a "catalytic nanosponge" that combines the catalysis of organosulfur oxidation and sequestration of the products from reaction mixtures is demonstrated. Group VI metal oxide nanoparticles (CrOx, MoOx, WOx) are embedded within hollow graphitized carbon nanofibers (GNFs), which act as nanoscale reaction vessels for oxidation reactions used in the decontamination of fuel. When immersed in a model liquid alkane fuel contaminated with organosulfur compounds (benzothiophene, dibenzothiophene, dimethyldibenzothiophene), it is found that MoO2@GNF nanoreactors, comprising 30 nm molybdenum dioxide nanoparticles grown within the channel of GNFs, show superior abilities toward oxidative desulfurization (ODS), affording over 98% sulfur removal at only 5.9 mol% catalyst loading. The role of the carbon nanoreactor in MoO2@GNF is to enhance the activity and stability of catalytic centers over at least 5 cycles. Surprisingly, the nanotube cavity can selectively absorb and remove the ODS products (sulfoxides and sulfones) from several model fuel systems. This effect is related to an adsorptive desulfurization (ADS) mechanism, which in combination with ODS within the same material, yields a "catalytic nanosponge" MoO2@GNF. This innovative ODS and ADS synergistic functionality negates the need for a solvent extraction step in fuel desulfurization and produces ultralow sulfur fuel. [ABSTRACT FROM AUTHOR]