Thermal induced errors are significant factors that affect machine tool accuracy. The deformation of spindle is the main contributor to thermal error. In this paper, the thermal characteristics of the spindle system are investigated. Taking into account the coupling of elastic deformation and temperature, the heat conduction of the spindle system is modeled. The heat of bearings and heat transfer coefficient, and boundary conditions of the spindle are determined. Based on the numerical results, an iterative model of spindle's temperature and thermal deformation are acquired under the actions of thermal loads using the finite element method. Taking the spindle of precision boring machine with some reasonable assumptions and simplicities as an example, the finite element analysis model of spindle thermal characteristics is analyzed with virtual prototyping, and the static/transient temperature field and thermal-structure field are calculated using ABAQUS software. The characteristics of heat flow and thermal deformation within the spindle are analyzed according to the simulation results. The research results provide a theoretical foundation for reasonable arrangement and optimal design to reduce radial and axial deformation of the spindle head, temperature controlling, and the error compensation to the precision machining tool.