A method for preparing molybdenum and sulfur containing compounds of the general formula X.sub.2 Mo.sub.2 S.sub.12.yH.sub.2 O, where X is a cation selected from the group consisting of Na.sup.+, K.sup.+, R.sub.4 N.sup.+, R.sub.3 NH.sup.+, R.sub.2 NH.sub.2.sup.+, RNH.sub.3.sup.+, NH.sub.4.sup.+, R.sub.4 P.sup.+, R.sub.4 As.sup.+,(R.sub.3 P).sub.2 N.sup.+, R is a C.sub.1 -C.sub.30 alkyl, C.sub.6 -C.sub.30 aryl, C.sub.7 -C.sub.30 aralkyl or C.sub.2 -C.sub.30 alkoxyalkyl group and mixtures thereof, and y is from 0 to 2. The method comprises preparing a sulfide solution that contains from about 9 wt. % to about 13 wt. % sulfide sulfur; contacting the solution with elemental sulfur and a hydroxide; adding a molybdenum compound for a time and at a temperature sufficient to form a reaction mixture and a precipitate; separating the precipitate; and contacting the remaining reaction mixture with additional sulfide solution to form (NH.sub.4 ).sub.2 Mo.sub.2 S.sub.12.yH.sub.2 O. When compounds containing cations other than NH.sub.4.sup.+ are to be produced, the (NH.sub.4).sub.2 Mo.sub.2 S.sub.12.yH.sub.2 O is contacted with a cation exchange compound containing a desired substitute cation selected from above and an anion selected from the group consisting of Cl.sup.-, Br.sup.-, F.sup.-, I.sup.-, BF.sub.4.sup.-, PF.sub.6.sup.-, OH.sup.-, BR.sub.4.sup.- where R is a C.sub.1 -C.sub.30 alkyl, C.sub.6 -C.sub.30 aryl, C.sub.7 -C.sub.30 aralkyl or C.sub.2 -C.sub.30 alkoxyalkyl group, and mixtures thereof, in the presence of a solvent and for a time and at a temperature sufficient to form X.sub.2 Mo.sub.2 S.sub.12.yH.sub.2 O, where X is other than NH.sub.4.sup.+.