Chloride (Cl) induced steel corrosion is a major cause of durability issues of reinforced concrete (RC) structures and causes a large economic loss every year. Understanding the mechanisms of Cl induced steel corrosion in concrete is of great importance to develop anti-corrosion methods and further lowers down the repair and strengthening frequency and cost. Hence, the nature of steel depassivation and corrosion induced by Cl at atomic scale was revealed through the density functional theory (DFT) calculations to better understand the Cl induced corrosion mechanism. The results indicated that Cl species weakened the bonding of oxygen (O) with outer iron (Fe) atoms while enhanced the hybridization of O with inner Fe atoms, thus induced the breakdown of passive films. Besides, Cl facilitated the charge loss of outer Fe atoms and improved the interactions of water molecular (HO) with these Fe atoms. When co-adsorption with O atom, hydroxyl (OH) generated by dissociative adsorption of HO enhanced the charge loss of outer Fe atoms. Then OH strongly bonded with the neighboring Fe atoms to form the initial corrosion products, iron hydroxides (Fe-OH). The above DFT calculations are consistent with the experimental results about the steel depassivation and corrosion processes in concrete and hopefully these results can guide the anti-corrosion design of RC structures.