Conductive heat transfer in the lithosphere at Mount Isa has been modelled based on published data on heat flow, thermal rock properties, and lithosphere architecture. Modelling results suggest that the high heat flow at Mount Isa is due to a combination of a thicker than normal crust and high concentrations of radioactive elements. During the last major tectonic activity in the Proterozoic, higher concentration of parent isotopes and the additional sedimentary overburden have increased lithosphere temperatures further. These results confirm that heat-producing elements play a key role in the thermal history of the Mount Isa Inlier and in other Australian Proterozoic terrains. The elevated lithosphere temperatures have significant implications for understanding Proterozoic tectonics and mineralisation, in particular the potential for shallow crustal melting, thermal weakening of the lithosphere, and for the evolution of deformation-related permeability. In general, high temperature gradients in continental crust cause a tectonic style dominated by pervasive viscous flow in partially molten crust, which in Mount Isa is evident from the formation of metamorphic core complexes during extension, and the absence of alpine-type nappes during contraction. In contrast, steep shear zones and fabrics formed in the upper crust during shortening of the rift complex in the Mid-Proterozoic Isan Orogeny. It is suggested that these steep structures formed where lateral strength contrasts existed in the lithosphere, caused by the differences in burial depths between cooler, tectonically denuded basement, and hotter basement covered by sedimentary basins. Increased permeability along steeply dipping faults and shear zones enables fluids to flow at higher rates across steep gradients of pressure, temperature and chemical concentration between magmatic, metamorphic and surface reservoirs. It is concluded that the link between thermal and mechanical processes in hot continental lithosphere greatly enhances the likelihood of hydrothermal mineralisation.