This research uses observations of reservoir-induced seismicity beneath Açu Reservoir, NE Brazil, to investigate the spatial distribution of permeability within the damage zone surrounding faults. The Açu dam is a 34 m high earth-filled dam constructed in 1983 on an. area of Precambrian shield. Our previous work has shown that fluctuations in seismic activity are related to varying reservoir level via the diffusion of pore pressure within high-permeability faults embedded in a lower-permeability matrix. High-resolution monitoring of the seismic activity within individual faults, using a network of three-component digital seismographs, has revealed a complex spatial pattern of earthquake clustering and migration that suggests heterogeneous fault zone hydraulic properties are present. We first review the laboratory and field evidence for variations in hydraulic properties associated with (1) structural architecture of faults and (2) confining pressure. We then model flow through a heterogeneous two-dimensional (2-D) fault embedded in, and explicitly coupled to, a 3-D medium and include a power law decay in diffusivity with depth associated with crack closure. Diffusivity of the fault is represented by a spatially correlated random field. We vary both the correlation length and variance of the diffusivity field and calculate the time lag between the maximum reservoir level and the maximum piezometric head in the depth range of observed seismic activity. By assuming that individual earthquake ruptures occur when the local piezometric head is at a maximum, we are able to infer the correlation length and variance that best explain the spatiotemporal pattern of the activity within each seismic cluster. The spatial and temporal evolution of seismicity within clusters is only found to be consistent with a causal mechanism of pore pressure diffusion when significant spatial structure is present in the heterogeneous fault hydraulic properties. Copyright 2005 by the American Geophysical Union.