An improved scattering optical model was developed under cylindrical coordinate to simulate the thermal effect of diffusing applicator in laser interstitial thermotherapy (LITT). The thermal damage was calculated by finite element method (FEM) using Pennes bio-heat transfer equation and Arrhenius injury integral formula. The numerical results showed that the scattering can considerably influence the evaluation of the lesion area, and the relationship between application powers or time and resulting tissue thermal damage was nonlinear. Although usually applying relatively low power can avoid tissue charring, rather higher power is recommended because it is indispensable to achieve necessary damage threshold and the therapy time can be shortened.