Some of the most complex volcanic thermodynamic processes occur when erupting magma interacts with water. In shallow water, “Surtseyan” eruptions are spectacular, and they efficiently fragment magma into fine ash particles. The aviation hazard from these eruptions depends the amount of transportable fine ash that is generated and whether it is aggregated into particle coatings or accretions. To investigate both mechanisms, we analyzed ash-encased lapilli from the Surtseyan eruptions of Capelinhos (Azores, 1957–1958) and Hunga Tonga–Hunga Ha’apai (Tonga, 2014–2015) using X-ray computed microtomography and electron microscopy. We discovered pyroclasts that were not coated, sensu stricto, but had enveloping ash produced by in situ granulation of the particle surface. This was caused by thermal stress as pyroclasts briefly traveled through water and were quenched during eruption. In situ granulation is thus an important secondary disruption process in shallow subaqueous eruptions. Our results imply that ash encasement is not always evidence of particle aggregation and accretion, but it may also result from new ash formation. Shallow-water conditions produce the most efficient ash-generation conditions, leading to the greatest hazard to downwind populations and air traffic.