The O(3)-initiated oxidation of beta-caryophyllene, a sesquiterpene emitted in forested areas, was theoretically characterized for the first time using DFT quantum chemical calculations combined with statistical kinetic RRKM/master equation analysis and variational transition state theory. O(3)-Addition occurs primarily, >95%, on the endocyclic double bond without a barrier, leading to a total rate coefficient of 8.3 x 10(-24) T(3.05) exp(1028 K/T) cm(3) molecule(-1) s(-1), with a slight negative T-dependence. Thermal and chemically activated unimolecular reactions following this addition, including the so-called ester and hydroperoxide channels, and internal formation of the secondary ozonide, where characterized and quantified; a newly discovered reaction pathway through intersystem crossing from a dioxirane to a triplet bis(oxy) biradical intermediate is incorporated in the mechanism. The first generation product distribution at 298 K is predicted as 74% stabilized Criegee intermediates (CI), 8% OH radicals together with vinoxy-type 2-oxo alkyl radical co-products, 8% acids, 0.3% esters, and 9% CO(2) with two alkyl radical co-products. The thermalized CI can convert to the secondary ozonide in many reaction conditions, in particular the atmosphere; secondary ozonides are thus expected as dominant products of the beta-caryophyllene ozonolysis. These results are consistent with the experimental data presented in the accompanying paper (Part I). The temperature dependence and uncertainties of the product distribution are discussed. The high molecular weight oxygenated products, including beta-caryophyllonic acid and secondary ozonides, are expected to contribute to secondary organic aerosol formation.