The surface and subsurface geology, hydrothermal alteration, and mineralogy of the Handcart Gulch area was studied using map and drill core data as part of a multidisciplinary approach to understand the hydrology and affects of geology on acid-rock drainage in a mineralized alpine watershed. Handcart Gulch was the locus of intense hydrothermal alteration that affected an area of nearly 3 square kilometers. Hydrothermal alteration and accompanied weak mineralization are spatially and genetically associated with small dacite to low-silica rhyolite stocks and plugs emplaced about 37-36 Ma. Felsic lithologies are commonly altered to a quartz-sericite-pyrite mineral assemblage at the surface, but alteration is more variable in the subsurface, ranging from quartz-sericite-pyrite-dominant in upper core sections to a propylitic variant that is more typical in deeper drill core intervals. Late-stage, hydrothermal argillic alteration [kaolinite and(or) smectite] was superimposed over earlier-formed alteration assemblages in the felsic rocks. Smectite in this late stage assemblage is mostly neoformed resulting from dissolution of chlorite, plagioclase, and minor illite in more weakly altered rocks. Hydrothermally altered amphibolites are characterized by biotitic alteration of amphibole, and subsequent alteration of both primary and secondary biotite to chlorite. Whereas pyrite is present both as disseminations and in small veinlets in the felsic lithologies, it is mostly restricted to small veinlets in the amphibolites. Base-metal sulfides including molybdenite, chalcopyrite, sphalerite, and galena are present in minor to trace amounts in the altered rocks. However, geologic data in conjunction with water geochemical studies indicate that copper mineralization may be present in unknown abundance in two distinct areas. The altered rocks contain an average of 8 weight percent fine pyrite that is largely devoid of metals in the crystal structure, which can be a significant source of trace metals in other areas with acid rock drainage. Thus, elevated base-metal concentrations in the trunk stream and discrete springs in the study area, as determined in previous studies, are likely derived from discrete metal-rich sources, rather than the abundant pyrite veins or disseminations. Pyrite is oxidized in nearly all outcrops examined. Drill core data show that zones of pyrite oxidation range in depth from 100 meters below the surface at higher elevations to just a few meters depth at the lowest elevations in the study area. However, discrete pyrite oxidation zones are present in drill core to depths of several hundred meters below the pervasive near-surface oxidation zones. These deeper discrete oxidation zones, which are present where fresh pyrite predominates, are spatially associated with fractures, small faults, and breccias. Quartz-sericite-pyrite-altered rocks containing unoxidized pyrite likely have the highest acid-generating capacity of all alteration assemblages in the study area. Hydrothermal alteration has left these rocks base-cation leached and thus acid-neutralizing potential is negligible. In contrast, propylitic-altered felsic rocks commonly contain trace to minor calcite and abundant chlorite, which provide some amount of acid-neutralization despite the presence of a few percent pyrite.