Vapor‐dominated hydrothermal systems are characterized by localized and elevated heat and gas flux. In these systems, steam and gas ascend from a boiling water reservoir, steam condenses beneath a low‐permeability cap layer, and liquid water descends, driven by gravity (“heat pipe” model). We combine magnetic, electromagnetic, and geoelectrical methods and CO₂ flux and subsurface temperature measurements in the Solfatara Plateau Thermal Area in the Yellowstone Caldera to address several fundamental questions: (1) What are the structural and/or lithological controls on heat and mass transport in vapor‐dominated areas? (2) What is the geometry and size of convecting multiphase thermal plumes? (3) Are thermal plumes associated with subsurface rock alteration and demagnetization? Magnetic and electromagnetic data inversions suggest an asymmetric 50‐ to 100‐m thick basin of glacial deposits with the thickest part adjacent to the margin of a rhyolite flow. The 3‐D electrical conductivity model in the glacial basin reveals a narrow vertical conductor interpreted as a focused multiphase plume, which coincides at the ground surface with the heat and CO₂ flux maxima. The magnetic data suggest that destruction of magnetic minerals due to rock alteration associated with the hydrothermal plume occurs mainly near the ground surface. We propose a model where the buoyant multiphase plume forms in response to decompression, boiling, and phase separation of pressurized thermal groundwater that discharges from the brecciated base of a rhyolite flow into the basin of glacial deposits. Results from multiphase groundwater flow and heat transport numerical simulations corroborate the first‐order characteristics of this model.