Canadian natural bitumen production will reach a peak of 112 million barrels per day in 2078 [1]. Pipelines are primarily used to transport this bitumen. Bitumen must be diluted in order to be pumped through a pipeline effectively because it is otherwise too viscous to flow [2]. Underoil droplet corrosion of diluted bitumen (dilbit) pipelines may lead to the loss of pipe wall thickness, which deteriorates the structural reliability and increases the risk of leaking of pipelines. The current models for atmospheric droplet corrosion, where no limitation to oxygen access is imposed, cannot be applied to underoil droplet corrosion in dilbit pipeline conditions. In this study, a NaCl droplet on X100 pipeline steel covered by paraffin oil is used to simulate the corrosive environment encountered in diluted bitumen pipelines. A new distinctive corrosion mechanism is proposed to explain the corrosion of X100 pipeline steel beneath an underoil salty droplet. This mechanism accounts for the depleted oxygen levels in the droplet environment. In the initial stage (1 h), the distribution of corrosion pits was heterogeneous with one area under the droplet presenting a higher pit density. As the corrosion proceeded (24 h), the localized corrosion was governed by pH development due to initial pit density. Regions of initially higher pit density switched to general corrosion, while regions with lower pit densities continued pitting. The effects of droplet volume, chloride ion concentration, and temperature on the underoil droplet corrosion behavior of X100 pipeline steel were also studied by scanning electron microscopy, Raman spectroscopy, and profilometry. At 23 °C, lepidocrocite and hematite were observed in the region where pitting was initially prevalent. However, as this region switched to uniform corrosion, goethite, lepidocrocite, and hematite were formed. The same distribution of crystal structures was identified for the droplets with varying volume and chloride ion concentration. When the temperature was increased to 60 °C, hematite was detected in both regions. Decreased droplet volumes, increased chloride concentration, and raised temperatures increase corrosion penetration when uniform corrosion is prevalent. This study provides important findings to better understand the mechanisms behind droplet corrosion underoil and informs future predictions of the corrosion rate of pipeline steels.