Existing models of the cathode processes in the Hg vacuum arc were analyzed and found to lead to contradictions. Specifically, if the electron emission is based on field emission, a considerable ion density is required near the cathode surface, leading to ion bombardment overheating of the surface. An alternative mechanism is proposed and analyzed. The near-cathode region of the discharge consists of three regions, which in order of their distance from the cathode surface are called the first plasma region, the double sheath, and the second plasma region. The surface of the first plasma region serves as a virtual plasma cathode for the discharge. Current at the cathode surface is conducted primarily by ion current from this plasma region. Electrons emitted from the surface of the first plasma region are accelerated through the double sheath region into the second plasma region. Likewise ions flowing from the second ion region are accelerated through the double sheath into the first plasma region where they serve as a significant heat source. A system of equations describing current continuity and energy conservation was formulated and solved for the above model. Two types of time-dependent solutions were found, with characteristics times of 0.1-1 and 100 /spl mu/s, respectively. These times correspond to the experimentally observed spot lifetimes for the transitional and fundamental discharge forms, respectively. Excited atom flow into the first plasma region plays an important role in its energy balance, as does the outflow of neutral atoms. The potential drop in the plasma regions, typically <0.5 V, is small in comparison to the double sheath potential drop U/sub sh/ (10-15 V). U/sub sh/ depends only weakly on the spot current, if the cathode erosion coefficient is constant. The length of the first plasma region is calculated to be 10/sup -5/ m, which is approximately equal to the experimentally observed dark space in the Hg vacuum arc. Acceleration of electrons from the first plasma region through U/sub sh/ explains the experimental observation of fast electrons.