A thick sequence of alkaline intrusions and volcanic rocks underlies a Quaternary caldera on Liliir Island. The sequence is host to a still active sub- aerial hydrothermal system and associated epithermal gold mineralisation. Sub- horizontal alteration horizons exhibit progressively increasing chondrite norma- lised (La/Lu) en and (La/Sm) cn ratios from unaltered shoshonites, to the potassic alteration zone, to the argillic altera- tion zone to the advanced argillic alte- ration zone. The increasing fractionation of HEE, and especially of LHEE, up the alteration sequence is the result of de- creasing pH, temperature and alkalinity of the hydrothermal fluids with increa- sing alteration intensity. HRE3 were especially mobile in argillic and advanced argillic alteration units characterised by acid fluid conditions and large fluid volumes. Abundant Cl, S and CO2 within the hydrothermal fluids and thus abundant REE complexing agents and large fluid volumes favoured the mobility of REE during hydro- thermal alteration of the volcanic rocks and intrusions. Steam escape, mixing of the gases with groundwater and a change from a magmatic neutral chloride hydro- thermal system to a meteoric acid sulphate system was accompanied by liquid/vapour ratio changes, pronounced alkalinity, pH and temperature decreases, and fluid/rock ratio increases. This caused the mobili- sation, fractionation and deposition of PF.F.