Localized corrosion of stainless steel beneath the barnacle-base is an unsolved issue for the marine industry. In this work, we clearly bring out for the first time the role of the barnacle cement in acting as an etchant, preferentially etching the grain boundaries, and initiating the corrosion process in stainless steel 316L. The investigations include structural characterization of the cement and corroded region, and also chemical characterization of the corrosion products generated beneath the barnacle-base. Structural characterization studies using scanning electron microscopy (SEM) reveals the morphological changes in the cement structure across the interface of the base-plate and the substrate, modification of the steel surface by the cement and the corrosion pattern beneath the barnacle-base. Fourier transform infrared spectroscopy (FTIR) of the corrosion products show that they are composed of mainly oxides of iron thereby implying that the corrosion is aerobic in nature. A model for the etching and corrosion mechanism is proposed based on our observations.