On 25 September 1995, phreatomagmatic explosions through Crater Lake at Ruapehu volcano, New Zealand, generated a closely spaced sequence of lahars. From direct observations of the flows and timely description of their deposits, we infer these debris flows transformed to hyperconcentrated streamflows not by dilution with incorporated water they overran, as previously proposed. Rather, the described debris flows diluted by selective deposition of their coarse clasts as they thinned and decelerated while spreading >700 m laterally over the Whangaehu fan. Deposits recording this transformation are veneering (<100 mm thick) layers of muddy sandy gravel interspersed with many boulders and cobbles. Downstream of their transformation to hyperconcentrated streamflows, ephemeral near‐channel deposits indicate the flows were vertically stratified. A new depositional model for these hyperconcentrated streamflows includes a basal, coarse, sediment‐concentrated “channel flow” that emplaced transitory near‐channel sediment wedges. The near‐channel sediment was bouldery, massive, and poorly sorted, like debris‐flow deposits elsewhere in the Whangaehu catchment. The upper and marginal parts of the lahars (the surface layer) were diluted, finer hyperconcentrated flows that left voluminous overbank deposits. The overbank sediment is poorly sorted gravelly sand, with some degree of horizontal bedding, like other hyperconcentrated flow deposits elsewhere in the catchment. The rapid erosion of channel‐flow deposits within days to months of the events indicates that geologic records will only preserve lateral‐flow deposits of such lahars. Hence, long after an event, interpretation of hyperconcentrated streamflow mechanisms from geologic deposits can be misleading without the near‐channel record.