This article presents innovative approaches for managing residual stresses and distortion in additive manufacturing (AM) of metal components (baseplate material: EN8; filler wire material: ER70S-6). The experiments are conducted with two approaches for thermal management—passive and active. The passive approach of experiments is performed by varying the selected process parameters to study their effect on residual stresses and distortion. The chosen parameters are current, torch speed, geometry, continuous or a delay in the deposition, and cooling arrangement. Based on the understanding gained from the passive approach, the active approach of thermal management was implemented by insulating the substrate with and without adaptive current and heating the substrate. The experimental results were corroborated with the simulation to understand the process better. A comparative study for hardness was made based on the T8/5 extracted from the simulation. These experiments and simulations endorse passive and active thermal management as effective tools that can alter the distortion and residual stress pattern and the mechanical properties of an AM component. The investigation concludes that the process parameters that lead to higher heat input vis-à-vis an increase in current or a decrease in speed increase the distortion. On the other hand, the parameters that affect the rate of heat distribution vis-à-vis torch speed and geometry affect the residual stresses. When current, traverse speed and a/b ratio were kept the same, active thermal management with a heated base reduced distortion from 1.226 mm to 0.431 mm, a 65% reduction compared to passive thermal management. Additionally, the maximum residual stress was reduced from 492.31 MPa to 250.68 MPa, with residual stresses decreasing from 418.57 MPa to 372 MPa. Overall, active thermal management resulted in a 63% reduction in distortion, lowering it from 1.35 mm to 0.50 mm using external heating. The components that are difficult to complete because of the in-process distortion are expected to be manufactured with thermal management, e.g., heating the substrate is an effective measure to manage the in-process distortion. Thermal management techniques depend on geometry; for instance, a concave surface, because of self-heating, reduces the cooling rate and has relatively less variation in hardness.