Damage zones exist around crustal faults, where micro- and macrocracks coexist and form a complex conduit network for fluid flow. The permeability of these zones can change rapidly as the crack network evolves during deformation. To investigate the relative influence of micro- and macrocracks on permeability, we performed an experimental study on Lanhélin granite, consisting of three steps: (1) monitoring thermal microcracking using high-temperature experiments, (2) measuring the evolution of physical properties following thermal stressing, and (3) measuring the permeability of thermally stressed samples during triaxial deformation. By monitoring acoustic emission activity and P-wave velocity during heating, we find that thermal microcracking starts at ~ 100 °C and accumulates up to the maximum temperature of 700 °C. Porosity and permeability increase and P-wave velocity, uniaxial compressive strength, and thermal conductivity and diffusivity decrease as thermal-stressing temperature increases from room temperature to 700 °C. The axial permeability of thermally stressed samples decreases by about one order of magnitude during triaxial loading to the peak stress, due to the closure of pre-existing microcracks, and then increases following the formation of a macroscopic shear fracture. Permeability then remains more-or-less constant as strain is accommodated by the resultant shear fracture. Our results show that the permeability of microcracked granite evolves differently to intact granite, for which permeability increases, during pre-failure deformation in the brittle regime. Such results have important implications for fluid flow in crustal fault systems and their potential for geothermal energy exploitation, which we explore using a simple numerical simulation.