We present X-ray spectral analysis of the accreting young star TW Hydrae from a 489 ks observation using the Chandra High Energy Transmission Grating . The spectrum provides a rich set of diagnostics for electron temperature T _ { e } , electron density N _ { e } , hydrogen column density N _ { H } , relative elemental abundances and velocities and reveals its source in 3 distinct regions of the stellar atmosphere : the stellar corona , the accretion shock , and a very large extended volume of warm postshock plasma . The presence of Mg xii , Si xiii , and Si xiv emission lines in the spectrum requires coronal structures at \sim 10 MK . Lower temperature lines ( e.g. , from O viii , Ne ix , and Mg xi ) formed at 2.5 MK appear more consistent with emission from an accretion shock . He-like Ne ix line ratio diagnostics indicate that T _ { e } = 2.50 \pm 0.25 MK and N _ { e } = 3.0 \pm 0.2 \times 10 ^ { 12 } cm ^ { -3 } in the shock . These values agree well with standard magnetic accretion models . However , the Chandra observations significantly diverge from current model predictions for the postshock plasma . This gas is expected to cool radiatively , producing O vii as it flows into an increasingly dense stellar atmosphere . Surprisingly , O vii indicates N _ { e } = 5.7 ^ { +4.4 } _ { -1.2 } \times 10 ^ { 11 } cm ^ { -3 } , five times lower than N _ { e } in the accretion shock itself , and \sim seven times lower than the model prediction . We estimate that the postshock region producing O vii has roughly 300 times larger volume , and 30 times more emitting mass than the shock itself . Apparently , the shocked plasma heats the surrounding stellar atmosphere to soft X-ray emitting temperatures and supplies this material to nearby large magnetic structures – which may be closed magnetic loops or open magnetic field leading to mass outflow . Our model explains the soft X-ray excess found in many accreting systems as well as the failure to observe high N _ { e } signatures in some stars . Such accretion-fed coronae may be ubiquitous in the atmospheres of accreting young stars .