Various hydrothermal processes have been suggested as important in the formation of porphyry coppers, e.g., orthomagmatic evolution of salt-rich liquid, condensation of salt-rich liquid from magmatic vapor, convection of ground water driven by magmatic heat, and boiling of ground water. A fluid inclusion study based on detailed two-dimensional sampling indicates that all of these processes may have contributed to the evolution of the Panguna deposit, but that the copper was deposited mainly by salt-rich liquid expelled directly from the magma. Significant salt-rich liquid may also have condensed from a vapor plume.A scheme for cooling the boiling liquids (initially unsaturated in NaCl at magmatic conditions) through supersaturation to unsaturation near 400 degrees C (by mixing with an externally derived liquid) is suggested to explain the systematic variation in homogenization properties of the salt-rich liquids. For a pressure near 300 bars determined at the outer boundary of the ore zone, the sequence of predicted phase changes based on the NaCl-H 2 O system corresponds with observed changes. Variations in the KCl and NaCl content of salt-rich liquid could be explained by the precipitation of halite, but that is incompatible with boiling. Salt-rich liquid was pumped into the ore zone by the hydrostatic-lithostatic pressure difference, then descended through the ore zone because of its density relative to ground water. Phenomena in the top of the system were dominated by the interaction of vapor and ground water.An oxygen fugacity near that of the hematite-magnetite buffer, and the predominance of SO 2 among vapor sulfur species, have been deduced from mineralogy and limits on partial pressures. The formation of mixed metal halides enhances the volatility of Fe, but vapor transport of Fe is insignificant. Zn and Mo undergo significant vapor transport. Cu may be transported in liquid in some cases and vapor in others. The alteration of wall rock to biotite generates HCl, which is probably removed by boiling. The sulfate in anhydrite may be a decomposition product of SO 2 , but a second mechanism is implied below 500 degrees C, where sulfide deposition becomes greater relative to sulfate. The high oxidation state of magmatic fluids during copper mineralization was due to the loss of H 2 from the magma in those early evolved volatiles that formed an amphibole-bearing assemblage.