Although low-sulfidation epithermal deposits, including the Hosokura deposit (Ag–Pb–Zn) in the Miyagi Prefecture, northern Japan, are globally significant metal sources, their ore deposition mechanisms are not thoroughly understood . This study aimed to construct a genetic ore deposition model for this deposit by focusing on the richest vein, the Fuji, and test the model using a numerical simulation of the formation and transitions of this fossil geothermal system. It was proposed that the mixing of neutral hydrothermal fluids (~260 °C) ascending through the vein with oxygenated cold groundwater caused early stage mineralization and the transport of hydrothermal fluids into the surrounding host rocks, forming a hydrothermal alteration halo around the vein that results in silicification, adularia alteration, and argillization. The progress of this alteration decreased the permeability of the halo and generated a mushroom-shaped low-permeability alteration halo (LPAH) in permeable zones surrounding the vein. The low-permeability and insulating properties of the LPAH increased the fluid temperature, the vein fluid boiled, and consequently the middle stage mineralization occurred. After a further decrease in LPAH permeability, hydrothermal brecciation resulting from increasing fluid pressure occurred at the top of the vein, resulting in late-stage mineralization. A TOUGH2 numerical simulation tested these proposed processes: early stage cooling of hydrothermal fluids by mixing with groundwater, the development of vapor in the vein by the formation of an LPAH during the middle stage, and an increase in fluid pressure leading to hydrothermal brecciation during the late-stage. The results of the simulation confirmed that a cold-water trap is an essential process for the generation of low-sulfidation epithermal deposits. Mushroom-shaped LPAHs, silicification zones, and brecciated veins caused by cold-water traps have been found in representative low-sulfidation epithermal deposits in Japan, such as the richest Au deposit, the Hishikari. Therefore, identification of cold-water-trap footprints can contribute to the exploration of this type of deposit.