The side of Casita Volcano collapsed on October 30, 1998, the day of peak rainfall as Hurricane Mitch moved across Central America. As the sliding debris eroded older deposits from the volcano and incorporated additional water and wet sediment from along its path, it increased in size about 9 times. By the time it reached the base of the volcano, the thick slurry of rocks and water had also diluted to a watery flow (hyperconcentrated flow, 40-80% sediment by weight). The fast-moving mixture then eroded additional sediment to transform into a debris flow containing more than 80 percent sediment by weight.

The lahar killed more than 2,000 people as it swept over the towns of El Porvenir and Rolando Rodriguez. The only warning of the approaching lahar was a noise like helicopters or thunder, and ground tremor that caused some residents to think an earthquake was occurring. Within 2.5 to 3 minutes, the lahar overran the towns, killing almost everybody. This short time, and the gentle topography and the lack of high ground nearby would have prevented escape by all but a few even if the flow had been detected by either instruments or an observer.

The tragic landslide and lahar at Casita Volcano demonstrates that the cones of old inactive stratovolcanoes are prone to sudden collapse, especially during wet conditions. Many settlements in Nicaragua are so close to volcanoes that detection of flowing lahars and a warning in time for successful evacuation are unlikely. The key to avoiding disasters like Casita is keeping settlements out of lahar pathways.

The two towns destroyed below Casita (El Porvenir and Rolando Rodriquez) were "new towns" that were, unbeknownst to planners, placed in a prehistorically active lahar pathway. At least three large lahars have inundated the area in the past 8,300 radiocarbon years. Scientists of the U.S. Geological Survey are working with the Nicaraguan Institute of Territorial Studies (INETER) to identify these pathways and the long-term frequency of lahars on the basis of prehistorical lahar deposits found in the area.