Methylmercury is the environmental form of neurotoxic mercury that is biomagnified in the food chain. Methylation rates are reduced when the metal is sequestered in crystalline mercury sulfides or bound to thiol groups in macromolecular natural organic matter. Mercury sulfide minerals are known to nucleate in anoxic zones, by reaction of the thiol-bound mercury with biogenic sulfide, but not in oxic environments. We present experimental evidence that mercury sulfide forms from thiol-bound mercury alone in aqueous dark systems in contact with air. The maximum amount of nanoparticulate mercury sulfide relative to thiol-bound mercury obtained by reacting dissolved mercury and soil organic matter matches that detected in the organic horizon of a contaminated soil situated downstream from Oak Ridge, TN, in the United States. The nearly identical ratios of the two forms of mercury in field and experimental systems suggest a common reaction mechanism for nucleating the mineral. We identified a chemical reaction mechanism that is thermodynamically favorable in which thiol-bound mercury polymerizes to mercury–sulfur clusters. The clusters form by elimination of sulfur from the thiol complexes via breaking of mercury–sulfur bonds as in an alkylation reaction. Addition of sulfide is not required. This nucleation mechanism provides one explanation for how mercury may be immobilized, and eventually sequestered, in oxygenated surface environments.