The optimal management of a hot water geothermal reservoir was considered. The physical system investigated includes a three-dimensional aquifer from which hot water is pumped and circulated through a heat exchanger. Heat removed from the geothermal fluid is transferred to a building complex or other facility for space heating. After passing through the heat exchanger, the (now cooled) geothermal fluid is reinjected into the aquifer. This cools the reservoir at a rate predicted by an expression relating pumping rate, time, and production hole temperature. The economic model proposed in the study maximizes discounted value of energy transferred across the heat exchanger minus the discounted cost of wells, equipment, and pumping energy. The real value of energy is assumed to increase at r percent per year. A major decision variable is the production or pumping rate (which is constant over the project life). Other decision variables in this optimization are production timing, reinjection temperature, and the economic life of the reservoir at the selected pumping rate. Results show that waiting time to production and production life increases as r increases and decreases as the discount rate increases. Production rate decreases as r increases and increases as the discount rate increases. The optimal injection temperature is very close to the temperature of the steam produced on the other side of the heat exchanger, and is virtually independent of r and the discount rate. Sensitivity of the decision variables to geohydrological parameters was also investigated. Initial aquifer temperature and permeability have a major influence on these variables, although aquifer porosity is of less importance. A penalty was considered for production delay after the lease is granted.