We describe and apply a new inversion method for 3-D modeling of magnetic anomalies designed for general application but which is particularly useful for the interpretation of near-seafloor magnetic anomalies. The crust subsurface is modeled by a set of prismatic cells, each with uniform magnetization, that together reproduce the observed magnetic field. This problem is linear with respect to the magnetization, and the number of cells is normally greater than the amount of available data. Thus, the solution is obtained by solving an under-determined linear problem. A focused solution, exhibiting sharp boundaries between different magnetization domains, is obtained by allowing the amplitudes of magnetization to vary between a pre-determined range and by minimizing the region of the 3-D space where the source shows large variations, i.e., large gradients. A regularization functional based on a depth-weighting function is also introduced in order to counter-act the natural decay of the magnetic field intensity with depth. The inversion method has been used to explore the characteristics of the submarine hydrothermal system of Brothers volcano in the Kermadec arc, by inverting near-bottom magnetic data acquired by Autonomous Underwater Vehicles (AUVs). Different surface expressions of the hydrothermal vent fields show specific vertical structures in their underlying demagnetization regions that we interpret to represent hydrothermal upflow zones. For example, at focused vent sites the demagnetized conduits are vertical, pipe-like structures extending to depths of ∼1000 m below the seafloor, whereas at diffuse vent sites the demagnetization regions are characterized by thin and inclined conduits.