The overarching goal of this work is to address the design of next-generation, high torque density electrical machines through numerical optimization using an integrated thermal-electromagnetic design tool that accounts for advanced cooling technology. A parametric thermal model of electric machines was constructed and implemented using a finite difference approach incorporating an automated, self segmenting mesh generation. A novel advanced cooling technology is proposed to improve thermal transport in the machine by removing heat directly from the windings via heat exchangers located between the winding bundles. Direct winding heat exchange (DWHX) requires high convective transport and low pressure loss. The heat transfer to pressure drop tradeoff was addressed by developing empirically derived Nusselt number and friction factor correlations for micro-hydrofoil enhanced meso-channels. The parametric thermal model, advanced cooling technique, Nusselt number and friction factor correlations were combined with a parametric electromagnetic model for electric machines. The integrated thermal-electromagnetic model was then used in conjunction with particle swarm optimization to determine optimal conceptual designs. The Nusselt number correlation achieves an R² value of 0.99 with 95% of the data falling within ± 2.5% similarly the friction factor correlation achieves an R² value of 0.92 with 95% of the data falling within ± 10.2%. The integrated thermal-electromagnetic design tool, incorporating DWHX, generated an optimized 20 kW permanent magnet electric machine design achieving a torque density of 23.2 N-m/L based on total system volume.