U.S. Geological Survey Newberry 2 was drilled to a depth of 932 m within Newberry caldera. The bottom-hole temperature of 265°C is the highest reported temperature of any drill hole in the Cascades region of the United States. The upper part of the stratigraphic section penetrated by Newberry 2 consists of caldera fill below which are increasingly more mafic lavas ranging from rhyodacite at 501 m to basalt at 932 m. Measured temperatures shallower than 300 m are less than 35°C, and rock alteration consists of hydration of glass and local palagonitization of basaltic tuffs. Incipient zeolitization and partial smectite replacement of ash and pumice occurred throughout the pumiceous lithic tuffs from 300 to 500 m. Higher-temperature alteration of the tuffs to chlorite and mordenite occurs adjacent to a rhyodacite sill at 460–470 m; alteration minerals within the sill consist of pyrrhotite, pyrite, quartz, calcite, and siderite. Below 697 m the rocks are progressively more altered with depth mainly because of increased temperature along a conductive gradient from 100°C at 697 m to 265°C at 930 m. Fluid inclusions in quartz and calcite indicate that temperatures in the past have been higher than at present, most likely due to local confining pressures between impermeable lava flows. Flow breccias are more altered than the adjacent dense massive lava flows, regardless of composition, because of their much higher permeability. Hydrothermal minerals in this zone are mainly mixed-layer chlorite-smectite, quartz, calcite, and pyrite. Chlorite becomes more abundant than mixed-layer clays near the bottom of the hole. In the lowest two lava flows, epidote, anhydrite, and scarce hematite occur locally. Alteration and leaching in the basal 2 m are unique and have led to the postulation of a localized two-phase fluid zone consisting mainly of steam and CO₂. The hydrothermal system of Newberry 2 is a simple evolving system associated with the evolution of Newberry Volcano. Only a few localized highly altered intervals where fracturing controlled fluid access occur in the core. There are no crosscutting fractures to indicate multiple hydrothermal systems. Chemical analyses of altered rocks and equivalent fresh rocks indicate that little chemical migration has taken place.