The 1.60 Ga hydrothermal Wernecke Breccia are hosted within metasedimentary rocks of the Wernecke Supergroup and exposed in the Wernecke, Ogilvie and southern Richardson Mountains of northern Yukon. Breccia clasts with soft sediment deformation textures were previously identified and interpreted as fragments of the Wernecke Supergroup that were torn off and carried upward during mud volcanism. This model was subsequently discounted because field relations and geochronology indicated that the Wernecke Supergroup was lithified and metamorphosed prior to brecciation. Our recent work confirms the presence of soft sediment within zones of Wernecke Breccia and demonstrates the need for an unlithified sediment source. Two types of soft sediment materials have been identified: red mudstone to sandstone, and green mudstone. These unlithified sediments were likely derived from late Paleoproterozoic water-saturated sediments. During breccia formation, the surface was breached and fragments of the unlithified sediments foundered into the breccia zones, mixing with clasts of lithified wallrock. The sediments descended to depths of at least 4 km where they were lithified and encased by hydrothermal cement. Subsequent erosion removed the source beds and exposed the breccia zones.