To resolve the microscopic origin of magnetism in the Fe2O3/FeTiO3-system, we have performed density functional theory calculations taking into account on-site Coulomb repulsion. By varying systematically the concentration, distribution and charge state of Ti in a hematite host, we compile a phase diagram of the stability with respect to the end members and find a clear preference to form layered arrangements as opposed to solid solutions. The charge mismatch at the interface is accommodated through Ti 4+ and a disproportionation in the Fe contact layer into Fe 2+ , Fe 3+ , leading to uncompensated moments in the contact layer and giving first theoretical evidence for the lamellar magnetism hypothesis. This interface magnetism is associated with impurity levels in the band gap showing halfmetallic behavior and making Fe2O3/FeTiO3 heterostructures prospective materials for spintronics applications.A challenge of today's materials science is to design ferromagnetic semiconductors operating at room-temperature (RT) for spintronics devices. Most of the efforts concentrate on homogeneous doping of semiconductors with magnetic impurities [1,2,3,4], but the interfaces in complex oxides prove to be another source of novel behavior [5,6,7]. The unique magnetic properties of the hematiteilmenite system [8, 9, 10] (a canted antiferromagnet and a RT paramagnet, respectively) currently receive revived interest as a possible cause of magnetic anomalies in the Earth's deep crust and on other planets [11] as well as for future device applications [3,12,13].Both hematite (a = 5.035Å, c = 13.751Å [14]) and ilmenite (a = 5.177Å, c = 14.265Å [15]) crystallize in a corundum(-derived) structure shown in Fig. 1 where the oxygen ions form a distorted hexagonal close packed lattice and the cations occupy 2/3 of the octahedral sites. In α-Fe 2 O 3 (space group R3c) there is a natural modulation of electronic density along the [0001]-direction where negatively charged 3O 2− layers alternate with positively charged 2Fe 3+ layers. At RT the magnetic moments of subsequent iron layers couple antiferromagnetically (AFM) in-plane with a small spin-canting, attributed to spin-orbit coupling [16,17,18]. In ilmenite, FeTiO 3 , Fe-and Ti-layers alternate, reducing the symmetry to R3 and the corresponding sequence is 3O 2− /2Fe 2+ /3O 2− /2Ti 4+ with AFM coupling between the Fe layers and T N =56-59 K [19].At the interfaces (IFs) in hematite-ilmenite exsolutions, charge neutrality is disrupted. One way to balance the excess charge at the interface is by a disproportionation in the Fe layer, now becom- * Electronic address: pentcheva@lrz.uni-muenchen.de ing mixed Fe 2+ and Fe 3+ . This lamellar magnetism hypothesis (LMH) was proposed by Robinson et al. [20] based on bond valence models and kinetic Monte Carlo simulations (kMC) with empirical chemical and magnetic interaction parameters. The increased technological interest in this system calls for an atomistic material specific understanding that can only be obtained from first principles calculatio...