This paper provides new observations of volcanic features and hydrological characteristics in and around Southern Thule, the southernmost group of islands in the South Sandwich Islands, including the first high-resolution bathymetric image of the Douglas Strait caldera. The South Sandwich Islands are the summits of several very large subduction-related volcanoes constructed at the eastern boundary of the Scotia Sea. Observations of the islands are scarce owing to their remote location and they are only rarely visited, yet the area is an active volcanic arc that is rapidly changing as a result of eruptions, including one (on Montagu Island) that has been ongoing for six years and is creating new land. The three islands that make up Southern Thule are morphologically different, and they illustrate different stages in the construction and evolution of islands in the South Sandwich group. We present the results of an acoustic and hydrographic survey that resulted in the first high-resolution, multibeam ‘swath’ image of the submarine Douglas Strait caldera. The results confirm the presence of a large sediment mound (c. 1000 m3 in volume) on the floor of the Douglas Strait caldera related to a flank collapse of Thule Island. The image also shows an extensive arcuate fault structure, interpreted as evidence that the caldera is nested, and its geomorphological freshness suggests that it is a very young feature that formed conceivably in the last few decades or centuries. The bathymetric image also reveals at least three cone- or mound-like structures within the caldera that may relate to renewed post-caldera volcanism (as pyroclastic cones and/or pillow mounds). Recently formed cones and faults associated with caldera rims are often associated with hydrothermal activity. However, temperature and salinity data collected within the caldera do not yet show any evidence of hydrothermal venting. The ocean surrounding Southern Thule has a prominent surface layer of low salinity water that is probably caused by a high meltwater flux derived from ice caps on the islands. This flux may have been enhanced by the recent warming trend observed in the Antarctic Peninsula, although volcano-related geothermal melting in the ice-filled Thule Island caldera may also contribute to the meltwater flux.