The electronic structure of vanadium sesquioxide V2O3 in its different phases has been calculated using the screened exchange hybrid density functional. The hybrid functional accurately reproduces the experimental electronic properties of all three phases, the paramagnetic metal (PM) phase, the anti-ferromagnetic insulating phase, and the Cr-doped paramagnetic insulating (PI) phase. We find that a fully relaxed supercell model of the Cr-doped PI phase based on the corundum structure has a monoclinic-like local strain around the substitutional Cr atoms. This is found to drive the PI-PM transition, consistent with a Peierls-Mott transition. The PI phase has a calculated band gap of 0.15 eV, in good agreement with experiment.