We report on the development and validation of an algorithm for estimating geoelectric fields induced in the lithosphere beneath an observatory during a magnetic storm. To accommodate induction in three-dimensional lithospheric electrical conductivity, we analyze a simple nine-parameter model: two horizontal layers, each with uniform electrical conductivity properties given by independent distortion tensors. With Laplace transformation of the induction equations into the complex frequency domain, we obtain a transfer function describing induction of observatory geoelectric fields having frequency-dependent polarization. Upon inverse transformation back to the time domain, the convolution of the corresponding impulse-response function with a geomagnetic time series yields an estimated geoelectric time series. We obtain an optimized set of conductivity parameters using 1-s resolution geomagnetic and geoelectric field data collected at the Kakioka, Japan, observatory for five different intense magnetic storms, including the October 2003 Halloween storm; our estimated geoelectric field accounts for 93% of that measured during the Halloween storm. This work demonstrates the need for detailed modeling of the Earth’s lithospheric conductivity structure and the utility of co-located geomagnetic and geoelectric monitoring.