UV photolysis of Ar-HCl is simulated by means of an exact wave packet treatment in three dimensions. The focus of the work is on the mechanism of indirect dissociation of the hydrogen atom, which leads to total fragmentation of Ar-HCl into H, Ar, and Cl. The results predict for this photodissociation path a probability of about 13% of the photolysis process. The remaining probability would be associated with direct photodissociation of the H fragment. Kinetic-energy distributions of the hydrogen fragments produced by indirect photodissociation are calculated for different excitation energies of Ar-HCl. The distributions reflect a pronounced structure of peaks associated with broad and overlapping resonances of the system. The resonance structure is present in the whole energy range covered by the absorption spectrum. Hydrogen atoms initially populating the resonances can dissociate from the cluster extensively cooled down, after several collisions with Ar and Cl. A mechanism is suggested for the fragmentation process due to indirect photodissociation, which involves successive jumps of the hydrogen to lower-energy resonances, induced by the collisions. A classical collisional model is proposed to rationalize qualitatively the fragmentation dynamics.