We demonstrate two-fold enhancement of the refractive-index modulation recorded in a photopolymerizable nanoparticle-(meth)acrylate polymer composite film by incorporating thiols acting as chain-transfer agents. The chain-transfer reaction of thiols with (meth)acrylate monomer reduces the crosslinking density of the formed polymer and facilitates the mutual diffusion of nanoparticles and monomer during holographic expo- sure. These modifications provide increased density modulations of nanoparticles and the formed polymers, resulting in the enhancement of the refractive index modulation as high as 1.6×10-2 at a wavelength of 532 nm. The incorporation of thiols also leads to the suppression of polymerization shrinkage and to the improve- ment of the grating̊’s spatial frequency response. Such simultaneous improvements is very useful for holographic applications in light and neutron optics.