Cook onions and garlic in oil 2 to 3 minutes. Mix in mushrooms and sherry, place lid on pot, and simmer over medium-high heat until mushrooms discharge liquid. Lower heat and cook, stirring often until mushrooms are tender and dark.
Mix in tomatoes, parsley, rosemary, oregano, and sugar and bring to a boil. Lower heat, place lid on pot, and simmer 10 to 15 minutes. Sprinkle with salt and pepper.