Given a self-similar set K defined from an iterated function system $\Gamma =(\gamma _{1},\ldots ,\gamma _{d})$ and a set of functions $H=\{h_{i}:K\to \mathbb {R}\}_{i=1}^{d}$ satisfying suitable conditions, we define a generalized gauge action on Kajiwara–Watatani algebras $\mathcal {O}_{\Gamma }$ and their Toeplitz extensions $\mathcal {T}_{\Gamma }$. We then characterize the KMS states for this action. For each $\beta \in (0,\infty )$, there is a Ruelle operator $\mathcal {L}_{H,\beta }$, and the existence of KMS states at inverse temperature $\beta $ is related to this operator. The critical inverse temperature $\beta _{c}$ is such that $\mathcal {L}_{H,\beta _{c}}$ has spectral radius 1. If $\beta <\beta _{c}$, there are no KMS states on $\mathcal {O}_{\Gamma }$ and $\mathcal {T}_{\Gamma }$; if $\beta =\beta _{c}$, there is a unique KMS state on $\mathcal {O}_{\Gamma }$ and $\mathcal {T}_{\Gamma }$ which is given by the eigenmeasure of $\mathcal {L}_{H,\beta _{c}}$; and if $\beta>\beta _{c}$, including $\beta =\infty $, the extreme points of the set of KMS states on $\mathcal {T}_{\Gamma }$ are parametrized by the elements of K and on $\mathcal {O}_{\Gamma }$ by the set of branched points.