Queen Alexandra Range (QUE) 99177 is one of the least altered CR carbonaceous chondrite known, with mineralogical and isotopic characteristics that indicate a high level of pristinity. In this study, we have examined the so-called smooth rims that surround many type I chondrules in QUE 99177, using SEM, EPMA, and FIB-TEM techniques. We have characterized their constituent phases to unravel the precursor material(s) of smooth rims, assess their formation mechanisms, and constrain the conditions of the altering fluid. Smooth rims are the most common type of rims around type I chondrules and exclusively occur around chondrules with Silica-rich Igneous Rims (SIRs). Smooth rims consist of an Fe-rich, hydrous silicate material that is Si- and Fe-rich, with minor Mg, Al, Ca, and Mn, and gives low analytical totals measured by EPMA. TEM observations reveal that the Fe-rich silicate phase is an amorphous gel that contains unaltered crystalline phases and igneous glass. Crystalline phases consist of igneous, unaltered, zoned pyroxenes with compositions consistent with pyroxenes in SIRs, as well as albite and chromite. The amorphous gel preserves previous crystal outlines with morphologies consistent with silica (cristobalite) grains in SIRs and has a composition identical to pseudomorphic silica replacements in SIRs. Based on these observations, we conclude that smooth rims derive from low-temperature aqueous alteration of silica in SIRs by an Fe-rich fluid. We suggest that the Fe was derived by leaching of amorphous silicates in the matrix, which reacted rapidly with melted water ice, although alteration of Fe,Ni metal blebs in SIRs could potentially be an additional source of Fe. Silica underwent dissolution and replacement whereas feldspar and glass remained unaltered because (1) the fluid was slightly alkaline, (2) cristobalite has a reaction rate much higher than quartz and feldspar, and (3) the alteration was very limited and fast, indicating that it was due solely to melting of accreted water ice and there was no introduction of additional fluid from external sources.