The electronic structure and magnetic properties of atomic sulfur and oxygen adsorbed on the iron (001) surface are examined using density functional theory (DFT). The sulfur/oxygen coverage is considered from a quarter of one monolayer (ML) to a full monolayer. The work function change, magnetic properties, and density of states are determined and compared. We find that the work function increases with sulfur coverage in agreement with experiment. We also find that sulfur interacts strongly with the surface layer and that the magnetic moment of the Fe surface decreases as the sulfur coverage increases. In the case of oxygen adsorption, we find that the magnetic moment of the surface Fe atoms instead increases. We show that the difference in surface magnetic moment between sulfur adsorption and oxygen adsorption can be simply explained combining the Slater–Pauling rigid band model linking d-occupation and magnetic moment with an electronegativity argument. Moreover, the work function of the Fe surface as a function of oxygen coverage is found to be very sensitive to overlayer arrangement, here seen in the cases of 0.5 ML c(2 × 2) and 0.5 ML p(2 × 1). This is shown to result from large differences in the surface dipole moment change induced by the oxygen adsorption in the two different overlayer arrangements.