The general solution of soil temperature variation is developed for a rectangular basement with a known heat flux distribution along the walls and the floor. The Interzone Temperature Profile Estimation (or ITPE) technique is applied to determine the steady-state variation of temperature within the ground. A water table at constant temperature is assumed to exist at a given depth below the soil surface. As an application of the general solution, the optimum thermal insulation distribution is determined for various basement configurations. A parametric analysis is conducted to determine the effect of basement depth and amount of heat flux required on the optimum insulation distribution along the surfaces of a rectangular basement.