According to this theory, the impure iron surface behaves like a small electrochemical cell presence of water containing dissolved oxygen or carbon dioxide. Such a cell is also called corrosion cell or corrosion couple. In these miniature corrosion cells, pure iron acts as anode and impure surfaces acts as cathode. Moisture dissolved oxygen or carbon dioxide in it comprises electrolytic solution.

At anode, oxidization of Fe atoms takes place. Thus, Fe atoms pass into solution as Fe²⁺ ions leaving behind electrons in the metal which are pushed into cathodic area.
                                              
Fe    Fe⁺² + 2e^-;   = - 0.44 V        (i)

At cathode, the electrons are picked up by the H+ ions which are produced either from H₂O or from H₂CO₃ (formed by dissolution of CO₂in moisture).
                                 
CO₂ + H₂O    H⁺ + HCO₃^-
                           
2H⁺(aq) + 2e^-    2H

The H atoms, thus, formed, reduce the dissolved oxygen as
                                 
2H + ½ O₂    H₂O

The net reduction process at the cathodic area is
                        
2H + ½ O₂ + 2e^-    H₂O;  = 1.23 V                      (ii)

The net reaction of the corrosion cell can be obtained by adding equations (i) and (ii)
                                     
F₂ + 2H⁺     ½O₂ 
                               
2 Fe²⁺ + H₂O;  = 1.67 V

The ferrous ions so formed move through water and come at the surface of iron object where these are further oxidized to ferric state by atmospheric oxygen and constitute rust which is hydrated iron (III) oxide.
                  
2Fe²⁺ + ½ O₂ + 2H₂O    Fe₂O₃ + 4H⁺
                                 
Fe²⁺ + xH₂O    Fe₂O₃xH₂O (rust)