A stable technique based on the finite element method for inverse analysis of coupled nonlinear thermo-elastic problems is presented. Not only the time-domain is divided into small intervals, but also the space-domain is divided into several sub-domains. The inverse problem is solved in each sub-domain subsequently. For the inverse analysis in each sub-domain, the unknown boundary conditions are found by using an optimization method and also by employing the information obtained in the previous sub-domain. The method is sufficiently stable to be used for inverse analysis of a thermo-elastic problem under a thermal shock. Three numerical examples are provided to demonstrate the efficiency of the proposed method. The effects of the number of sub-domains are investigated in the examples.