This paper characterizes late Holocene basalts and basaltic andesites at Medicine Lake volcano that contain high pre-eruptive H₂O contents inherited from a subduction related hydrous component in the mantle. The basaltic andesite of Paint Pot Crater and the compositionally zoned basaltic to andesitic lavas of the Callahan flow erupted approximately 1000 ¹⁴C years Before Present (¹⁴C years B.P.). Petrologic, geochemical and isotopic evidence indicates that this late Holocene mafic magmatism was characterized by H₂O contents of 3 to 6 wt% H₂O and elevated abundances of large ion lithophile elements (LILE). These hydrous mafic inputs contrast with the preceding episodes of mafic magmatism (from 10,600 to ∼3000 ¹⁴C years B.P.) that was characterized by the eruption of primitive high alumina olivine tholeiite (HAOT) with low H₂O (<0.2 wt%), lower LILE abundance and different isotopic characteristics. Thus, the mantle-derived inputs into the Medicine Lake system have not always been low H₂O, primitive HAOT, but have alternated between HAOT and hydrous subduction related, calc-alkaline basalt. This influx of hydrous mafic magma coincides temporally and spatially with rhyolite eruption at Glass Mountain and Little Glass Mountain. The rhyolites contain quenched magmatic inclusions similar in character to the mafic lavas at Callahan and Paint Pot Crater. The influence of H₂O on fractional crystallization of hydrous mafic magma and melting of pre-existing granite crust beneath the volcano combined to produce the rhyolite. Fractionation under hydrous conditions at upper crustal pressures leads to the early crystallization of Fe-Mg silicates and the suppression of plagioclase as an early crystallizing phase. In addition, H₂O lowers the saturation temperature of Fe and Mg silicates, and brings the temperature of oxide crystallization closer to the liquidus. These combined effects generate SiO₂-enrichment that leads to rhyodacitic differentiated lavas. In contrast, low H₂O HAOT magmas at Medicine Lake differentiate to iron-rich basaltic liquids. When these Fe-enriched basalts mix with melted granitic crust, the result is an andesitic magma. Since mid-Holocene time, mafic volcanism has been dominated primarily by hydrous basaltic andesite and andesite at Medicine Lake Volcano. However, during the late Holocene, H₂O-poor mafic magmas continued to be erupted along with hydrous mafic magmas, although in significantly smaller volumes.