A ground heat exchanger (GHE) can efficiently exploit geothermal energy, and a ground source heat pump (GSHP) is an important type of geothermal application. The distributed thermal response test (DTRT) is widely used to measure layered ground thermal properties for shallow GHEs, but nowadays, there is a lack of studies applying the DTRT to deep coaxial GHEs (DCGHEs). This study proposes a new parameter estimation method (PEM) by adopting the DTRT data of a DCGHE to estimate layered ground thermal properties and applies the proposed PEM to simulated DTRTs under different boundary conditions, and the estimated values of the layered ground thermal properties are compared with the true values. Under heat output rate or inlet temperature boundary conditions, the relative errors of the thermal conductivities and heat capacities of ground estimated using the proposed PEM are basically within 2% and 4%, respectively, except for shallower layers with a depth range of 0–800 m. The larger errors for shallower layers may be caused by weaker heat transfer between the fluid and ground, and the errors are basically lower for higher heat output rates. The predicted fluid temperature distributions during 120 d using the estimated values of the layered ground thermal properties match well with those using the true values. The results show that the proposed PEM is viable for DCGHE DTRT interpretation under heat output rate and inlet temperature boundary conditions, is a cost-effective way to establish key parameters for GSHP design, and would promote geothermal development.