Hellstone

 is an ore and material that produces the highest tier items in game until you defeat the Wall of Flesh to activate Hard Mode. It is only found in the Underworld. Mining Hellstone now requires at least a Nightmare Pickaxe. It can be smelted into Hellstone Bars at a Hellforge and Adamantite Forge (obtainable in Hardmode), and as of 1.0.6, it requires only 4 Hellstone and only 1 Obsidian. Like most other ores and soils, it can also be crafted into a Hellstone Brick, but not into Hellstone Wall, at any furnace. When converted to Hellstone Bars, they can be used to create powerful new molten variations of weapons and armor. Hellstone deals 20 fire damage to the player (before defense) when they touch it, unless they wear an Obsidian Skull, Obsidian Horseshoe, Obsidian Shield, or use an Obsidian Skin Potion. Hellstone has no value when sold to vendors.

Mining Tips
Mining Hellstone can be a significant problem, not only because Hellstone deals fire damage to the player (which can be negated with an Obsidian Skull); but mainly because of the dangerous monsters of The Underworld, as well as the fact that Hellstone now spawns lava when mined.

One approach to mining Hellstone can be to just drop down to the Hellstone/Ash "floor" and start digging out the Hellstone. One must keep in mind, however, that Hellstone Bars are very expensive and difficult to acquire as 4 pieces of Hellstone and 1 piece of Obsidian are required to forge only one bar.

A third method requires several Obsidian Skin Potions and Gills Potions. You may also want to use a Cloud in a Bottle, Rocket/Spectre Boots, Flippers, or a Grappling Hook. Find a pool of lava, use the potions and jump in. They are usually large. Simply use the Grappling Hook to stick close to the Hellstone while you mine it, escaping using your preferred method when your potion supply runs out. This technique will allow you to collect a decent amount of Hellstone, depending on how many potions you have.

Dealing with the Hellstone itself
As for dealing with the lava that is spawned when Hellstone is mined, you can use an Obsidian Skin Potion to negate damage from lava, as well as preparing a lava barrier to keep the lava from spilling onto you, and simply mine the Hellstone from behind the barrier. Prior to Update 1.1, you could also safely mine Hellstone by placing blocks of sand to soak up the lava formed as the Hellstone blocks broke.

Trivia

 * Hellstone will not spawn lava when mined if it is located outside of the Underworld.
 * Hellstone does not hurt NPCs when they touch it.