Provided is a shoe that has a multi-layered sole with embedded padding. More specifically, at least one of the layers includes a sheet of base material having a hole through its central region, such that the hole is surrounded by the base material, and a cushioning pad attached to the base material so as to fill the hole. In one representative embodiment, the cushioning pad is approximately the same size and shape as the hole, and the perimeter of the pad is stitched to the perimeter of the hole. As a result of such construction, padding is provided in a manner that tends to resist damage over time.