This paper investigates the thermal operating capability of an interior permanent magnet synchronous machine. An iterative workflow is presented, combining electromagnetic modeling, control, power‐loss modeling, and thermal modeling to identify maximum thermal stable operating points. Special attention is given to the critical temperatures of winding and permanent magnets. A nonlinear reduced order model based on finite element method model was used to simulate the system, including an inverter model with space vector pulse width modulation in combination with field‐oriented control. Furthermore, an advanced iron core loss model and thermal lumped parameter model were employed. The presented approach allows for evaluating losses and their impact on steady‐state temperatures. The obtained results highlight the significant influence of space vector pulse width modulation on iron core losses and the importance of considering both advanced power‐loss models and adequate thermal models when analyzing the machine's thermal state. This research emphasizes the concept of a thermally stable envelope, providing a comprehensive understanding of the thermal boundaries under various operating conditions.