An automated method for estimating layout-induced variations in threshold voltage in an integrated circuit layout. The method begins with the steps of selecting a diffusion area within the layout for analysis. Then, the system identifies Si/STI edges on the selected area as well as channel areas and their associated gate/Si edges. Next, the threshold voltage variations in each identified channel area are identified, which requires further steps of calculating threshold voltage variations due to effects in a longitudinal direction; calculating threshold voltage variations due to effects in a transverse direction; and combining the longitudinal and transverse variations to provide an overall variation. Finally, a total variation is determined by combining variations from individual channel variations.