Heterogeneous reactions at the surfaces of mineral dusts represent a key process in the formation of atmospheric aerosols. To quantify the rate of aerosol formation in climate modeling as well as combat hazardous aerosols, a deep understanding of the mechanisms of these reactions is essential. In the present work, density functional theory calculations, including a Hubbard-like +U correction, were employed to elucidate the reaction between SO2 and the hematite(0001) surface. Three reaction conditions are considered: dry, wet, and aerobic. In the absence of water and oxygen, adsorption energies of SO2 on the clean Fe-O3-Fe-termination were found to be about -0.8 to -1.0 eV and resulted in the formation of an adsorbed SO3-like species. The addition of water leads to surface hydroxylation and has little effect on promoting the SO2 adsorption. Under such circumstances, an HSO3-like species was formed with a smaller adsorption energy of about -0.5 eV. By contrast, the presence of molecular oxygen enhances the SO2 adsorption significantly as the two species combine to form sulfate SO4 2-, with adsorption energies of -1.31 to -1.64 eV. The calculated vibrational frequencies of the adsorbate species provide insight into the surface bonding and a useful spectral fingerprinting for experimental measurements. These results elucidate the atomistic mechanism of the reaction between SO2 and hematite and highlight the important role of atmospheric O2 in the formation of sulfates.