Gypsum veins and faults were studied in red mudstones of the Upper Triassic Mercia Mudstone Group, in the Bristol Channel Basin, exposed in E–W-trending cliffs at Watchet on the Somerset Coast (SW England). In nodular gypsum horizons, individual gypsum nodules are connected by subhorizontal gypsum veins. In evaporite-free mudstone layers, however, dense anastomosing networks of gypsum veins occur. In a 300 m long profile dissected by 28 (mostly) normal faults with small displacements, 24 faults have veins following them, indicating palaeofluid transport along the fault planes. Ninety-seven cross-cutting relationships and mostly perpendicular vein fibres indicate that the veins are primarily extension fractures. The thickest veins in the vein network are subhorizontal (160 measurements), indicating a vertical orientation of the minimum principal compressive stress (horizontal basin compression). Such a stress state may have existed during basin inversion associated with Alpine compression (late Cretaceous to early Tertiary). I propose that the gypsum veins are the result of hydrofracturing. In the gypsum nodules, then presumably consisting of anhydrite, overpressure was generated related to the hydration of anhydrite to gypsum. Stress concentration around the nodules led to rupturing and injection of thin subhorizontal hydrofractures. Some of the calcium-sulphate saturated fluids were then transported upwards along the faults and gained access to evaporite-free mudstone layers where dense anastomosing vein networks developed. Most veins were arrested during their propagation by layers with contrasting mechanical properties (stress barriers). Some veins, however, propagated through the barriers along faults to shallower levels. The dense networks of mineral veins observed in Watchet indicate that hydrofractures can generate a very high temporary permeability in fluid reservoirs.