A microscopic theory of outersphere electron transfer reactions in electrolyte solutions is presented. Both static and dynamic effects of solvent and ion atmosphere on rates of electron transfer are calculated by employing molecular models. The donor-acceptor system is composed of two spheres and the electrolyte solution is composed of dipolar solvent molecules and ions which are treated at the same molecular level. A microscopic expression for the free energy of activation is derived by using density functional theory. The dynamic effects are calculated by using a molecular hydrodynamic theory which properly includes finite wave vector modes of relaxation of solvent and ion atmosphere. Explicit numerical results are presented for the activation free energy and the rate constant of electron transfer in solutions of varying ion concentration. It is found that ion atmosphere can make an important contribution to the activation free energy at finite ion concentration although the net increase in the activation energy is not very significant for the solutions studied in this work. This happens because, with increase of ion concentration, the ion atmosphere contribution to the total activation free energy increases, whereas the solvent contribution shows a decreasing trend. The solvent behaves as an effective less polar medium due to screening by ions and, therefore, its contribution to the activation free energy decreases as ion concentration is increased.