A method for thermal driven placement begins by first computing thermal response functions for individual components for several locations on a placement surface as a preprocessing step to placement. The thermal response functions can then be used to compute junction temperatures of components quickly and accurately during placement of the components in a layout. For a given component location, the component's junction temperature is computed by summing the contributions of neighboring components with the component's own contribution. The difference between predefined junction temperatures for the components and the calculated junction temperatures can then be used to assess the merits of the placement.