We have investigated the application of ground, laboratory, and airborne optical remote sensing methods for the detection of hydrothermal alteration zones associated with the Izok Lake volcanogenic massive sulfide (VMS) deposit in Nunavut, Canada. This bimodal-felsic Zn-Cu-Pb-Ag deposit is located above the tree line in a subarctic environment where lichens are the dominant cryptogamic species coating the rocks. The immediate host rhyolitic rocks have been hydrothermally altered and contain biotite, chlorite, and white micas as dominant alteration minerals. These minerals have spectral Al-OH and Fe-OH absorption features in the short-wave infrared wavelength region that display wavelength shifts, which are documented to be due to chemical compositional changes. Our ground spectrometer measurements indicate that there is a systematic trend in the Fe-OH absorption feature wavelength position of biotite/chlorite with increasing distance from the VMS deposit: the average Fe-OH absorption feature wavelength position of the proximal areas (398–3,146 m from mineralization) is observed at 2,254 nm, and that of the distal areas (5,782–6,812 m) at 2,251 nm. Moreover, the proximal areas have an average Al-OH absorption feature wavelength position at 2,203 nm, in contrast with the average wavelength position at 2,201 nm in the distal areas, implying a spectral shift of 2 nm. These findings indicate that hydrothermal alteration zones can be detected by hyperspectral remote sensing, despite the presence of abundant lichen cover. However, the airborne results discussed in this study required the screening out of more than 99% of the pixels in the area.