Hydrothermal systems change in response to volcanic activity, and in turn may be sensitive indicators of volcanic activity. Fumaroles are a surface manifestation of this interaction. We use time series of soil temperature data and numerical models of the hydrothermal system to investigate volcanic, hydrologic and geologic controls on this diffuse degassing. Soil temperatures were measured in a low-temperature fumarole field located 3.5 km from the summit of Masaya volcano, Nicaragua. They respond rapidly, on a time scale of minutes, to changes in volcanic activity also manifested at the summit vent. The soil temperature response is repetitive and complex, and is characterized by a broad frequency signal allowing it to be distinguished from meteorologic trends. Geophysical data reveal subsurface faults that affect the transport of fumarole gases. Numerical modeling shows that these relatively impermeable faults enhance flow through the footwall. On a larger scale, modeling suggests that uniform injection of fluid at depth causes groundwater convection in a permeable 3-4 km radial fracture zone transecting the entire flank of the volcano. This focuses heat and fluid flux and can explain the three distinct fumarole zones located along the fracture. We hypothesize that the rapid response of fumarole temperature to volcanic activity is due to increased flow of gas through the vadose zone, possibly caused by changes in the subsurface pressure distribution. Numerical models show that an abrupt injection of hot gas, at approximately 100 times background rates, can cause the rapid increase in temperature observed at the fumaroles during volcanic activity. A decrease in hot fluid injection rate can explain the gradual decrease in temperature afterwards. Mixing with surrounding vadose-zone fluids can result in the consistent and abrupt decreases in temperature to background level following hot gas injection. Fumaroles result from complex interaction of the volcanic-hydrologic-geologic systems, and can therefore provide insight into these systems. Increases in fumarole temperature correspond to increased gas flux related to changes in volcanic activity, suggesting that monitoring of distal fumaroles has potential as a volcano monitoring tool, and that fumarole temperatures can provide insight into the response of shallow gas systems to volcanic activity.