In order to use an electric induction motor to power an automotive vehicle, heat occurred in a motor is an important issue. Generally, an induction motor could be operating at a high load for many extensive periods. The generated heat in motor could cause damage on motor parts subsequently decreasing their useful service life. The objective of this study was to develop a cooling system of the induction motor by introducing liquid coolant passages on a housing part to obtain higher cooling efficiency than that of conventional Totally Enclosed Fan Cooled system (TEFC).Principally, conventional TEFC finned housing and rear fan would be replaced by a cylindrical aluminum housing. Special heat transfer oil was chosen as a coolant mainly due to its dielectric property. The liquid cooling housing geometry was defined by series of cooling passages to guide the liquid coolant through and around the housing. The design of liquid cooling system was performed via computational simulation. In the main simulation work, the boundary conditions of heat generation in motor were obtained from previous experimental and computational work on existing TEFC motor. Using resulting temperature distribution in the motor as a design criteria, the effect of two operational variables were investigated i.e. coolant flow pattern and coolant flow rate. Simulation results in each design case were compared and discussed to determine the finalized concept of the liquid cooling system prior to a prototype fabrication and actual performance testing.