When Permanent Magnet Synchronous Machines (PMSM) working with rated load or overload, stator iron loss and copper loss, bearings friction loss, permanent magnet (PM) eddy-current all will cause PM temperature rise. In this condition, the PM is affected by the temperature and the stator of the reverse magnetic field generated prone to arouse demagnetization phenomenon, it will directly affect the performance of permanent magnet machines. Previous calculation method which used magnetic circuit method to analyze PM demagnetization characteristics cannot reflect the actual working condition of PM. Firstly, the calculation formula of PM thermal stability is deduced in this paper. Secondly, demagnetization characteristics are analyzed based on FEM, which can reflect the actual working condition of PM more accurately. This paper providing reference basis for optimum electromagnetic design, PM selection and optimum PM design.