The volcanic island Surtsey, off the south coast of Iceland, was created by volcanic activity in 1963–1967. Core from a 181-m-deep hole extending 123 m below sea level shows the results of 12 yr of hydrothermal alteration of basaltic tephra. The primary cause of heating of the tephra and of development of the hydrothermal system was the intrusion of dikes below sea level. At present, the hottest part of the hole, at a maximum temperature of 150 °C, is cooling at ∼0.9 °C per year. Palagonitization of sideromelane glass, a dominant constituent of the tephra, is an important alteration process that is strongly temperature dependent, the rate doubling for every 12 °C increase. At 60 °C, <40% of the glass is palagonitized, but above 100 °C, >90% is palagonitized. Above 120 °C, olivine crystals are replaced on their edges by nontronite; the thickness of clay doubles for each 8 °C increase. Ten hydrothermal minerals have crystallized in the tephra at 25 to 150 °C; the dominant species are smectite (nontronite), analcite, phillipsite, and tobermorite. The primary clay species of palagonite is probably nontronite. Other minerals are halite, opal, calcite, chabazite, xonotlite, anhydrite, and gypsum. No major differences in mineral occurrence are noted above and below sea level, but phillipsite and tobermorite tend to grow larger below sea level, even at the same temperature. Analcite appears at lower temperature (55 °C) above sea level than below sea level (75 °C). Anhydrite is most abundant deep in the hole, where inflowing, cool sea water precipitated sulfate due to reduced sulfate solubility at higher temperatures.