A methodology was developed to optimize the 3D geometrical design layout of an active integrated power electronics module (IPEM) by considering both electrical and thermal performance. This paper is focused on the thermal analysis, which was performed using 3D finite element and computational fluid dynamic (CFD) analyses. A parametric study was conducted to determine the thermal performance of several different design layouts. A sensitivity analysis was performed to determine the overall uncertainty of the predicted simulations. The final design, Gen-II.C, provided a 70% reduction in the common mode current, a 4% reduction in the size of the geometric footprint, and a 3°C reduction in the maximum temperature over Gen-II.A, thus providing an increase in the overall performance.