Lithium-sulfur (Li-S) batteries are widely recognized as promising candidates for high-energy-density storage systems owing to their theoretical specific capacity and energy density, environmental friendliness, and the natural abundance of sulfur. However, their commercialization is hindered by critical challenges, including the lithium polysulfide (LiPSs) shuttle effect, active material loss, sluggish redox kinetics, and uncontrolled lithium dendrite growth. Recently, transition metal compounds (TMCs) have been employed for the functional modification of separators in Li-S batteries, driven by their distinctive electronic structures and superior surface/interface activities. The rational design and application of TMCs as separator modification layers can not only effectively suppress the LiPSs shuttle, enhance sulfur utilization, and accelerate interfacial reaction kinetics, but also modulate lithium deposition behavior, thereby improving the overall capacity and longevity of Li-S batteries. Herein, drawing upon recent literature, this review systematically explores the multifunctional mechanisms, representative material systems, and application performance of various TMCs, ranging from earth-abundant, cost-effective base metals to highly catalytic noble and rare-earth metal compounds. Furthermore, the characteristics, advantages, and limitations of these materials are summarized. Finally, this review delineates the design principles of TMCs for separator modification and provides perspectives on their application prospects in overcoming the core technical bottlenecks of Li-S batteries.