An analysis of the distribution, composition and alteration zonation of Cambrian granites which intrude the Mt Read Volcanics of western Tasmania provides evidence that there may have been a direct input of magmatic fluids containing Fe, Cu, Au and P to form the copper-gold volcanic-hosted massive sulphide (VHMS) mineralisation in the Mt Lyell district. Interpretation of regional gravity and magnetic data indicates that a narrow discontinuous body of Cambrian granite (2–4 km wide) extends along the eastern margin of the Mt Read Volcanic belt for over 60 km. The Cambrian granites are altered magnetite series types which show enrichment in barium and potassium, and contrast markedly with the fractionated ilmenite series Devonian granites related to tin mineralisation elsewhere in the Dundas Trough. Copper mineralisation occurs in a linear zone above the apex of the buried Cambrian granite body at the southern end of the belt, from Mt Darwin to the Mt Lyell district over a strike length of 25 km. Gold and zinc mineralisation are concentrated higher in the volcanic stratigraphy more distant from the granite. Overlapping zones of alteration extend from the granite into the surrounding volcanic rocks. An inner zone of K-feldspar alteration is overprinted by chlorite alteration, which passes outwards into sericite alteration. Magnetite ± pyrite ± chalcopyrite ± apatite mineralisation is concentrated in the chlorite alteration zone as veins and low grade disseminations. The Mt Lyell copper-gold stringer and disseminated mineralisation is hosted in felsic volcanic rocks 1 to 2 km west of the interpreted buried granite position. Magnetite-apatite ± pyrite veins in the Prince Lyell deposit at Mt Lyell are very similar to the veins in the halo of the granite, further south, and provide evidence for magmatic fluid input during the formation of the copper-gold VHMS deposits. A model involving deeply penetrating convective seawater, mixing with a magmatic fluid released from the Cambrian granites, best explains the features of VHMS mineralisation in the Mt Lyell district.