The Watershed scheelite deposit is located in an extinct fore-arc basin in the Mossman Orogen of North Queensland. This fore-arc region comprises multiply deformed, Ordovician–Silurian metasedimentary rocks of the Hodgkinson Formation, and it was intruded by Carboniferous–Permian granites of the Kennedy Igneous Association. At Watershed, the Hodgkinson Formation includes strongly deformed skarn-altered conglomerate, psammite and slate units, which record four deformation events that evolved from ductile (D1–3) to brittle–ductile (D4). Early, D1–2 scheelite mineralisation in Carboniferous monzonite and skarn-altered conglomerate formed during regional prograde metamorphism, which reached upper greenschist to lower amphibolite facies conditions. Permian, D4 scheelite mineralisation was deposited in transtensional, shear-related veins, vein haloes and skarn-altered conglomerate during retrograde, lower greenschist facies metamorphism. During D4, four stages of retrograde alteration (retrograde stages 1–4) affected the rocks. Fluid inclusion assemblages in retrograde stage 2, vein scheelite and quartz are characterised by a low-salinity H2O–NaCl ± CH4 fluid (XCH4 <0.01, 1.4–8.0 wt% NaCleq). The fluid inclusions show evidence for fluid mixing between a low (∼0 wt% NaCleq) and a medium (<8 wt% NaCleq) saline fluid. Scheelite mineralisation P–T conditions were determined at ∼300 °C and 1–1.8 kbar (i.e. a depth of 3.7–6.7 km), indicative of a high geothermal gradient (35–75 °C/km), which was likely caused by the heat from the Permian granites. The presence of pyrrhotite and arsenopyrite in D4 veins (retrograde stage 4), plus graphite and methane in the fluid inclusions in scheelite, indicates reduced mineralisation conditions. Oxygen isotope compositions (δ18OVSMOW) of retrograde stage 2 scheelite (+3.8 to +7.3‰), plagioclase (+7.0 to +11.8‰) and quartz (+12.6 to +15.5‰) indicate a fluid temperature of 306 ± 56 °C with δ18OVSMOW values between +4.7 and +8.3‰. Retrograde stage 3 muscovite δDVSMOW (−73.4 to −62.7‰) and δ18OVSMOW (+11.5 to +13.2‰) values were used to calculate the O–H isotopic compositions of the fluids in equilibrium with the minerals at various possible temperatures (250–300 °C). The results are consistent with a metamorphic origin for the mineralising fluid. Sulfur isotope compositions (δ34SCDT between −2.5 and +2.8‰) for vein-hosted, retrograde stage 4 sulfides indicate that sulfur could have come from seawater or seawater sulfate, which is consistent with the local geology, even though this range overlaps with magmatic sulfur isotope compositions. Metamorphic fluids probably originated from devolatilisation reactions in the Hodgkinson Formation during prograde metamorphism. Permian intrusions acted as heat source enhancing metamorphic fluid flow and metal transport.