As antibiotic-resistant bacterial strains emerge and pose increased global health risks, new antibacterial agents are needed as alternatives to conventional antimicrobials. Naturally occurring antibacterial clays have been identified which are effective in killing antibiotic-resistant bacteria. This study examines a hydrothermally formed antibacterial clay deposit near Crater Lake, OR (USA). Our hypothesis is that antibacterial clays buffer pH and Eh conditions to dissolve unstable mineral phases containing transition metals (primarily Fe²⁺), while smectite interlayers serve as reservoirs for time release of bactericidal components. Model pathogens (Escherichia coli ATCC 25922 and Staphylococcus epidermidis ATCC 14990) were incubated with clays from different alteration zones of the hydrothermal deposit. In vitro antibacterial susceptibility testing showed that reduced mineral zones were bactericidal, while more oxidized zones had variable antibacterial effect. TEM images showed no indication of cell lysis. Cytoplasmic condensation and cell wall accumulations of <100 nm particles were seen within both bacterial populations. Electron energy loss analysis indicates precipitation of intracellular Fe³⁺-oxide nanoparticles (<10 nm) in E. coli after 24 h. Clay minerals and pyrite buffer aqueous solutions to pH 2.5–3.1, Eh > 630 mV and contain elevated level (mM) of soluble Fe (Fe²⁺ and Fe³⁺) and Al³⁺. Our interpretation is that rapid uptake of Fe²⁺ impairs bacterial metabolism by flooding the cell with excess Fe²⁺ and overwhelming iron storage proteins. As the intracellular Fe²⁺ oxidizes, it produces reactive oxygen species that damage biomolecules and precipitates Fe-oxides. The ability of antibacterial clays to buffer pH and Eh in chronic non-healing wounds to conditions of healthy skin appears key to their healing potential and viability as an alternative to conventional antibiotics.