A thorough investigation of the adsorption and diffusion of Mg, O, and O2 on MgO(001) terraces is performed by first-principles calculations. The single Mg adatom weakly binds to surface oxygens, diffuses, and evaporates easily at room temperatures. Atomic O strongly binds to surface oxygens, forming peroxide groups. The diffusion of the O adatom is strongly influenced by the spin polarization, since energy barriers are significantly different for the singlet and triplet states. The crossing of the two Born–Oppenheimer surfaces corresponding to the distinct spin states is also analyzed. Although the O2 molecule does not stick to the perfect surface, it chemisorbs on surface nonstoichiometric point defects such as O vacancies or Mg adatoms, forming in the latter case new chemical species on the surface. We show that the oxidation rate limiting factor in an O2 atmosphere is the concentration of point defects (O vacancies and Mg adatoms) in the growing surface. The simulated O core-level shifts for the various adsorption configurations enable a meaningful comparison with the measured values, suggesting the presence of peroxide ions on growing surfaces. Finally, the computed energy barriers are used to estimate the Mg and O surface lifetimes and diffusion lengths, and some implications for the homoepitaxial growth of MgO are discussed.