Peroxydisulfate (PDS) is a commonly used oxidant for in-situ chemical oxidation. There is still a lack of reliable methods for PDS determination, especially in the presence of other strong oxidants or other anions. Therefore, a new method was developed based on the evolution of a stable oxidation product from Acid Blue 40 (AB40) dye. The procedure was assessed in terms of its effectiveness for PDS determination in complex matrices, e.g., containing other oxidants. It was proven that the AB40 molecule selectively reacts with the sulfate radical, generated from PDS by heat activation, whereas it is inert towards other oxidants such as hydrogen peroxide, peroxymonosulfate ion or calcium peroxide. Mass spectrometry analysis, combined with theoretical investigations (density functional theory), confirmed the mechanism of this reaction and the product responsible for the color generation. The effect of AB40 concentration, activation temperature, presence of common anions, pH and other parameters were evaluated and a suitable analytical procedure for the PDS detection has been proposed. The limits of detection and quantification were determined to be 2 μM and 2.5 μM, respectively, which makes this method one of the most sensitive in the scientific literature for PDS determination. It is believed that this method may be very easily (colorimetry), quickly (30 min) and effectively used for groundwater and wastewater that possess complicated matrices.