These occur in areas where a magma conduit passes through the water table. The magma can be liquid or recently solidified, but still hot. The heat from the magma causes water to become steam. As the steam rises it carries volcanic gases such as hydrogen sulfide (H2S) to the surface. This mixture of steam and gas is erupted from vents and fissures in the ground.

Due to this chemical activity, fumaroles can be very dangerous. Associated chemical reactions can color the surrounding rocks.

These features are sometimes called "dying volcanoes" because they occur near the end stages of volcanic activity as the magma deep underground solidifies and cools.