The hydrothermal alteration at Sulphur Bank, Lake County, California, is characterized by the phases alunite, kaolinite, and amorphous silica. Comparison between the observed mineralogical zonation and theoretical simulation of the water-rock interaction reveals that the alteration process at Sulphur Bank may be described on a broad scale in terms of an irreversible thermodynamic model based on the assumption of local equilibrium. However, this theoretical model alone fails to explain the details of the mineralogical zonation of the veins and alteration halos at Sulphur Bank. The zonation may be the result of a coupled reaction-fluid transport system in which two solute transport mechanisms--advective flow through open veins and diffusion--build superimposed alteration sequences.As a result of aqueous mercury-complex stability studies, it is inferred that mercury is transported as sulfide complexes at Sulphur Bank. In spite of the common association of mercury and organic matter in some hydrothermal systems, newly compiled thermodynamic data indicate that organic mercury complexes are unstable under reducing conditions typical of hydrothermal systems.Both boiling and oxidation are effective depositional processes for cinnabar according to theoretical calculations presented here. Oxidation best fits the geologic characteristics of the near-surface mineralization at Sulphur Bank, although boiling may be responsible for deeper mercury and possible gold mineralization.