Lithium-ion (Li-ion) batteries are becoming widely used high-energy sources and a replacement of the Nickel Metal Hydride batteries in electric vehicles (EV), hybrid electric vehicles (HEV) and plug-in hybrid electric vehicles (PHEV). Because of their light weight and high energy density, Li-ion cells can significantly reduce the weight and volume of the battery packs for EVs, HEVs and PHEVs. Some materials in the Li-ion cells have low thermal stabilities and they may become thermally unstable when their working temperature becomes higher than the upper limit of allowed operating temperature range. Thus, the cell working temperature has a significant impact on the life of Li-ion batteries. A proper control of the cell working temperature is crucial to the safety of the battery system and improving the battery life. This paper outlines an approach for the thermal analysis of Li-ion battery cells and modules. The thermal behavior was analyzed of a commercially available A123 Hymotion™ L5 PCM pack assembled with the A123-26650 Li-ion cylindrical cells using the electro-thermal finite element model developed in this paper. The simulation results showed good agreement with measurements. This demonstrates that the electro-thermal finite element model developed in this study can reasonably characterize the thermal behavior of a battery pack. Although only cylindrical cells are analyzed, the method for characterizing the thermal behavior of the Li-ion battery cells developed in this study can also be applied to battery cells with other geometries, such as prismatic and pouch cells.