A four-quadrant transducer (4QT.) is a hybrid electric vehicle (HEV) power train concept. It can enable the internal combustion engine (ICE) to operate at optimum efficiency during all driving conditions with both torque and speed control. The thermal property is a vital problem due to its special configuration. Aiming to find the hot spot and investigate the cooling system of the 4QT, the thermal field is calculated with finite-element method (FEM). The simulation is validated by the comparisons with the experiment. The influences of the forced-air cooling, water cooling, and the distribution of the cooling channels on the cooling performance are discussed, respectively. The stator air ducts; are removed, and 12 water channels evenly distributed in the housing are employed. The design principle of the cooling system is presented. The speed impacts of air flow and water flow are discussed and provide a parameter reference for choosing the forced-air cooling fan and water pump properly.