In this paper, we propose a methodology for calculating on-chip temperature gradient and leakage power distributions. It considers the interdependence between leakage power and local temperature using a general circuit simulator as a differential equation solver. The proposed methodology can be utilized in the early stages of the design cycle as well as in the final verification phase. Simulation results proved that consideration of the temperature dependence of the leakage power is critically important for achieving reliable physical designs since the conventional temperature analysis that ignores the interdependence underestimates leakage power considerably and may overlook potential thermal runaway.