The Zn‐Cd‐S critical minerals system is a significant mineralogical indicator of hydrothermal ore‐forming processes. The understanding of greenockite (CdS) formation in natural mineral systems is very restricted due to low crustal abundances (Cd <0.2 ppm). We report the first occurrence of greenockite from the Bagada orogenic gold prospect, Paleoproterozoic Mahakoshal belt, Central Indian Tectonic Zone (CITZ). This provides an ideal opportunity to access the occurrence and its genesis. Greenockite occurs in discrete sheared quartz veins hosted in phyllites. Sulphide mineralization is closely associated with hydrothermal chlorite alterations. Pyrrhotite, arsenopyrite, pyrite, and chalcopyrite assemblages are formed at high temperatures, while sphalerite and galena precipitated when the temperature decreased. Greenockite, native silver and bismuth with gold precipitated during the breakdown of arsenopyrite to scorodite in progressively oxidizing conditions. Greenockite precipitation occurred in a transforming hydrothermal environment from a reducing to an oxidizing one during late‐stage hydrothermal alteration. Sphalerite and chlorite thermometry yielded temperatures in the range from 266 to 366°C for this late‐stage hydrothermal alteration. Textural relations show two modes of occurrence of greenockite, one (Gck‐1) as exsolution within sphalerite (Sp‐2) and the other (Gck‐2) occurring as a discontinuous rim replacing the Cd‐rich sphalerite (Sp‐3). The Gck‐1 contains high Zn and low Cd, while as compared to Gck‐2. Zinc and Cd in greenockite show diadochy relation (Zn2+ ↔ Cd2+). Laser ablation ICPMS analyses of sphalerite (Sp‐2) reveal remarkably high Cd contents (1.9–12 wt%). Cd >0.02 ppm suggests possible Cd derivation from sphalerite (Sp‐2) under variable fS2, T, pH, fO2 conditions, fluid–rock interaction, and change in the Zn/Cd ratio. Sphalerite compositions display a low Zn/Cd (av.22) ratio and high temperature of formation, with characteristics intermediate between volcanogenic massive sulphides (VMS) and magmatic‐hydrothermal Cu‐Pb‐Zn system.