The discovery of areas of bulk gray hematite on the surface of Mars is among the most interesting of the results from Mars Global Surveyor (MGS). The individual outcrops are concentrated in equatorial, low-albedo regions from the Valles Marineris to the Meridiani Planum region to the east. While the Thermal Emission Spectrometer (TES) team favored an aqueous process for the formation of this deposit, recent geologic studies have interpreted deposits in the region to have a volcanic origin. Competing ideas for the method of formation of bulk hematite range from aqueous alteration, burial diagenesis, and metamorphism to igneous processes. Here we show that some of the spectra collected over Meridiani Planum and Aram Chaos from the Mariner 6 and 7 spacecraft have a high 3 μm band depth. This feature is associated with hydrated minerals in the surface layer, and the hydrated spectra coincide with the mapped hematite regions. This supports an aqueous mode of hematite formation and, as hematite itself is not hydrated, suggests the presence of other hydrous mineral phases in these areas. We discuss the implications of this association for origin and evolution of these deposits.