The Kakkonda geothermal reservoir, Japan, is atypical high-temperature liquid-dominated geothermal reservoir, except for its distinctive two-layered temperature structure. It has a shallow permeable reservoir of 230-260 degrees C, and a deep less permeable reservoir of 350-360 degrees C. Geology and hydrology indicate that the shallow reservoir is one to two orders of magnitude more permeable than the deep reservoir, but that the two reservoirs communicate. It has been widely assumed in engineering and scientific circles that the connection between the two reservoirs is a zero or low permeability barrier to fluid flow. We show that this hypothesis is untenable, based on both physical evidence and numerical simulation. we numerically model the evolution of the geothermal system as it heats after emplacement of an intrusion. The two-layered temperature structure is found to be a consequence of the permeability difference, i.e. the two-layered permeability structure.