The formation of mud volcanoes in the Gulf of Cadiz is closely linked to diapirism in the deep subsurface. The Mercator mud volcano (MMV) is a rare example where diapiric emplacement, in addition to being key for upward fluid migration, is also an important zone for fluid and mineral diagenesis. The most intriguing findings in the near-surface muds of the MMV are extremely high salinities of up to 5.2 M of NaCl from diapiric and evaporitic halite dissolution and the occurrence of authigenic gypsum and anhydrite crystals, both of which have not been observed to date in the Gulf of Cadiz. Employing a thermodynamic model we elucidate how the interplay of temperature pulses, strong salinity gradients, and fluid flow dynamically drive mineral dissolution and re-formation. The strong increase in salinity in the pore fluids has important implications for thermodynamic equilibria by significantly lowering the activity of water, thereby raising the gypsum–anhydrite transition zone from >1 km to about 400 m sediment depth at the MMV. This transition is further shifted to immediately below the seafloor during intervals of active mud and fluid expulsion when the MV surface temperature is heated up to at least 30 °C. As a consequence, precipitation of authigenic gypsum near the sediment surface (1–2 mbsf) has been linked to the dissolution of evaporites below the MMV. More precisely, the mechanisms generating supersaturation in the ascending gypsum-saturated MMV fluids are (1) the slow and constant cooling of these fluids along the geothermal gradient during their ascent leading to formation of ubiquitous micro-crystals and (2) the more rapid cooling after a heat pulse or transport from greater and warmer depth during an active mud volcano phase leading to the precipitation of cm-scale gypsum crystals or even fist-size concretions. The MMV fluids approaching the salt diapir from farther below have experienced a genesis similar to those of other mud volcanoes in the Gulf of Cadiz located above deep-rooted faults. These processes include clay mineral dewatering, thermogenic degradation of organic matter and deep high-temperature leaching of terrigenous sediments or continental crust.