A lumped-parameter thermal model is presented for axial flux permanent magnet (AFPM) machines. The model provides the steady-state thermal solution to derive the temperatures at different parts of the machine, including the temperatures in the stator windings and the temperature of the magnets. Temperature-dependent thermal properties of the materials used in the machine construction as well as the stator winding resistance and consequently copper losses require temperature update in accurate design of the machine. Therefore, an iterative coupled electromagnetic and thermal design program is proposed in this study. A 5-kW AFPM generator is designed using the proposed program with regarding the thermal behavior of the machine. Tests performed on the designed machine verify that the defined thermal resistance network has a high ability to predict the nodal temperatures accurately.