Thermally induced errors have a major significance on the positional accuracy of a machine tool. Heat generated during the machining process produces thermal gradients that flow through the machine structure causing linear and nonlinear thermal expansions and distortions of associated complex discrete structures, producing deformations that adversely affect structural stability. The heat passes through structural linkages and mechanical joints where interfacial parameters such as the roughness and form of the contacting surfaces affect the thermal resistance and thus the heat transfer coefficients. This paper presents a novel offline technique using finite element analysis (FEA) to simulate the effects of the major internal heat sources such as bearings, motors and belt drives of a small vertical milling machine (VMC) and the effects of ambient temperature pockets that build up during the machine operation. Simplified models of the machine have been created offline using FEA software and evaluated experimental results applied for offline thermal behaviour simulation of the full machine structure. The FEA simulated results are in close agreement with the experimental results ranging from 65% to 90% for a variety of testing regimes and revealed a maximum error range of 70 νm reduced to less than 10 νm.