A new family of lighting products is developed as laser diodes replace LEDs in the remote phosphor configuration. The resulting lighting systems, also known as laser-excited remote phosphor systems, exhibit advanced characteristics compared to LEDs, such as significantly higher luminance and smaller étendue. However, the bottleneck in their performance is often considered to be the conversion process within the phosphor layer. The high-intensity exciting laser beam in combination with the low thermal conductivity of ceramic phosphor materials leads to thermal quenching, a phenomenon in which the emission efficiency decreases as the temperature rises. In order to investigate the thermal limitations and derive the optimization parameters for these systems, the simulation strategy proposed here effectively takes into account the interplay between the thermal and optical effects. The time-dependent heat equation is solved based on the system’s energy balance equation, while the optical effects are modeled within the geometrical optics regime using a ray tracing algorithm. The coupling is achieved considering the temperature-dependent quantum yield (or efficiency) for the phosphor material. For simulation purposes the phosphor material can be considered as a bulk diffuser; the bulk scattering properties are introduced: the absorption and scattering coefficients as well as the scattering (or phase) function. The two-term Henyey-Greenstein function is adopted as scattering function here, since it combines computational efficiency and accuracy. To conclude, an opto-thermal simulation scheme is required for the optimization of a phosphor-converted lighting source. Efficient device design can contribute to the advancement of green lighting technology, a step towards meeting the environmental challenges of our age.