Machiya are a type of townhouse that were once common in Kyoto but are now becoming scarce, as owners often shy away from conducting expensive repairs, and instead choose to build contemporary replacements.
Fukasawa sought to create a "tranquil and elegant atmosphere" in his renovation of the property.
His design leaves the exterior intact, but opens up the interior, creating plenty of space for displaying Issey Miyake's clothing collections.
Traditionally, machiyas would contain a shop and a home upstairs. There would usually also be a storeroom, known as a kura, located behind.
At Issey Miyake Kyoto, the kura has been converted into a small gallery space, where the brand plans to showcase its "spirit of making things" alongside references to regional culture and history.
For the two-storey interior of the store, Fukasawa created an open-plan space by stripping out all of the interior walls. As a result, the building's traditional wooden structure is now exposed.
These are complemented by glass cases with matching dark frames, which are used for presenting a collection of accessories.
Side walls have been replastered and left unpainted, offering a clean backdrop to the brand's displays of clothing and bags.
According to Issey Miyake, the colour scheme was based on a shade of Japan's historic sumi paint.
"A new space is born, where Kyoto's historic machiya and Issey Miyake's spirit of making things are beautifully coordinated," said Fukasawa.
"The charcoal grey plaster creates a tranquil and elegant atmosphere, where the beauty of tradition and innovation meet and become one."
In the kura, walls are painted white to create a more traditional gallery aesthetic. For the store's opening, which took place this week, it is hosting an exhibition of the brand's collaborations with influential Japanese graphic designer Ikko Tanaka.
Photography is by Masaya Yoshimura.