Dione would require an atmosphere rich in greenhouse gases such as Sulfur Hexaflouride. If that doesn't work, giant mirrors could circle around the icy satellite.This would be very expensive if not impossible with current technology. With surface gravity 2.38% the strength of Earth's, Dione's atmosphere may need to be replenished at intervals and protection from the solar wind.
Terraforming the cratersEdit
This is easier than terraforming Dione entirely. Domes will cover these terraformed craters.