Abstract: Grid-forming power conversion system (PCS) is a key equipment for achieving bidirectional energy transfer between DC energy storage components and AC power grid. Thermal design should be carried out on PCS due to its high power-consumption to ensure the reliability of the internal electronic devices. Finite element method was used to conduct thermal simulation on an over-entering and down-out integrated PCS. The simulation results show that the hot air discharged from the outlet heats the inlet air, causing an increase of 2.4 ℃ in the average inlet temperature and an increase of 2.9 ℃ in the maximum temperature of the power modules. Furthermore, we proposed to install an air deflector at the outlet of the PCS to reduce the heating effect of hot outlet air. The effects of the length, installation height, and installation angle of the air deflector were studied. It was found that a 600 mm-length air deflector installed right above the outlet and perpendicular to the PCS housing can give a better result. Comparing with the original design, the average temperature of the inlet air was reduced by 1.2 ℃ and the maximum temperature of the power modules was reduced by 2.4 ℃. The research reported here is helpful for the thermal design and structural optimization of grid-forming integrated PCS.