We aimed to perform three-dimensional imaging of the underlying geothermal system to a depth of 2 km using magnetotellurics (MT) at around the Yugama crater, the Kusatsu–Shirane Volcano, Japan, which is known to have frequent phreatic eruptions. We deployed 91 MT sites focusing around the peak area of 2 km × 2 km with typical spacings of 200 m. The full tensor impedances and the magnetic transfer functions were inverted, using an unstructured tetrahedral finite element code to include the topographic effect. The final model showed (1) low-permeability bell-shaped clay cap (C1) as the near-surface conductor, (2) brine reservoir as a deep conductor (C3) at a depth of 1.5 km from the surface, and (3) a vertical conductor (C2) connecting the deep conductor to the clay cap which implies an established fluid path. The columnar high-seismicity distribution to the east of the C2 conductor implies that the flushed vapor and magmatic gas was released from the brine reservoir by breaking the silica cap at the brittle–ductile transition. The past magnetization/demagnetization sources and the inflation source of the 2014 unrest are located just below the clay cap, consistent with the clay capped geothermal model underlain by brine reservoir. The resistivity model showed the architecture of the magmatic–hydrothermal system, which can explain the episodic volcanic unrest.