The condition for thermal stability of phase-conjugate resonator (PCR) is derived by means of transfer matrix method. It is pointed out that the PCR is not certainly thermo-stable if only the condition G1G2 -1/2 is satisfied. Therefore, optimal design of PCR is necessary in order to obtain highquality output beams. The localization phenomenon of compensating distortions by using phase-conjugate techniques can be explained with the results obtained in this paper.