The Waiotapu geothermal system is hosted by silicic rocks of the Taupo Volcanic Zone, New Zealand. Exploration drilling in the late 1950s down to 1100 m provided physical information on the system. Measured temperatures show a boiling profile to 295 °C, with shallow inversions, particularly in the north. Total discharge fluid samples were collected; the geothermometry and measured temperatures show that fluids derive mainly from a shallow (~400 m deep) reservoir at about 225°C. Petrologic study of drillcore samples recovered from seven wells reveals an alteration assemblage of quartz and albite + adularia, with a variable distribution of chlorite, pyrite, calcite, zeolites, epidote, pyrrhotite, sphene, leucoxene, apatite and minor base metal sulfides; white mica is a late overprint, particularly well developed at shallow depths. Surficial alteration of kaolin, cristobalite, alunite and smectite clays reflect alteration by acid sulfate, steam-heated waters. The activities of components in minerals (determined from microprobe analyses and composition-activity relations) and fluids (speciated to reservoir conditions) indicate equilibrium now exists between the fluids and white mica; the Na/K ratio of the fluid is being controlled by dissolution of albite and adularia, while its H 2 H 2S ratio is buffered by pyrite replacing pyrrhotite. The fluids are now slightly undersaturated with respect to calcite. The present deep fluids boil adiabatically from at least 300°C to 230°C; at depths of ≤500 m, this ascending chloride fluid is variably diluted by a steam-heated water (of zero chloride) that lies over, and occurs on the margin of, the system like a discontinuous umbrella; the steam-heated water is relatively CO 2-rich (≤0.1 m). The cooling at shallow levels by this mixing has shifted the alteration from albite-adularia stability to white mica stability; this shift is enhanced by the CO 2-rich nature of the diluent. Dilution of ascending chloride fluids by shallow waters is also supported by the oxygen and hydrogen isotopic composition of the mixture, with the deep fluid being enriched in δ 18O and δD from local meteoric by ~7 and 10%., respectively. The patterns in whole rock δ 18O indicate that they were largely shifted in isotopic composition prior to incursion of steam-heated waters (possibly induced by a series of hydrothermal eruptions ~900 years ago). In contrast, the δ 18O composition of late vug calcite indicates its formation is related to the initial incursion of steam-heated groundwater and subsequent cooling; this is supported by fluid inclusion evidence. The δD shift from local groundwater composition, and the δ 13C composition of CO 2 determined from calcite (−4 to −6%.), may be evidence for a magmatic input to the meteoric convection cell. The shallow portion of the Waiotapu geothermal system has recently evolved, both chemically and physically, by incursion of fluids from a steam-heated carapace. Continued refluxing of these relatively cool, hybrid fluids progressively deeper (with their ‘recycled’ CO 2 content) will hasten hydrolytic leaching (in contrast to a single pass of adiabatically cooling deep fluids). This action, accompanied by argillic alteration, may eventually seal the deeper portions of the system, hastening its demise. There is evidence for similar events occurring in the fossil environment at epithermal depths