A novel spacer fabric with a weft-knitted structure of silicone tube and foam inlays is proposed for use in insoles to alleviate in-shoe pressure, reduce moisture and enhance thermal comfort. The material variables, including the diameter of the spacer yarn, type of inlaid material and net wrap and spacer pattern have been systematically investigated. Their force reduction and thermal characteristics in terms of air and water vapour permeabilities, thermal conductivity and impact force reduction are determined and compared to those of traditional insole materials. The results show that the inlays can effectively enhance the impact force reduction of the 3D spacer fabrics. In comparison to traditional insole materials, the proposed spacer fabric with an inlaid structure can enhance air and moisture permeabilities and heat dissipation to provide greater wear comfort for prolonged use. The air permeability, thermal conductivity and impact force reduction of the inlaid spacer structure can be modified with changes to the diameter of the spacer yarn, type of inlay and net material used and spacer pattern, whilst its water vapour permeability can also be varied by using different types of inlays. Spacer fabric with a higher number of spacer yarn courses and spacer yarn with a large diameter not only exhibits good impact force reduction with uniform thickness, but also offers good thermal conductivity. The findings of this study will contribute toward an insole design with the use of alternative insole materials for optimal foot protection.