The realization of a high power density, is a frequently discussed requirement in the design process of electrical machines. A fundamental relationship between cooling methodology and power density of electrical machines with fixed operational frequencies is introduced in basic machine handbooks. More recent applications require the usage of speed variable drives that are fed by frequency inverters. The inter-dependencies between cooling concept and power density of speed variable electrical machines are more complicated than the speed independent case. The loss mechanisms are influenced by frequency-dependent effects. Those effects, in addition to the speed- and torque-dependent control strategy lead to a dependency between loss distribution in the machine and their operational condition. Available design procedures for electrical machines include suggestions for the machine design in dependency of the selected cooling technology. A detailed analysis of the maximum potential and the limitations of a cooling technology is not given. Such an approach is performed in the here presented work. The maximum potential to increase the power density is studied depending on the cooling mode and the cooling medium. The determined theoretically high potential to increase the power density is limited in real applications. The reason for this limitation is discussed within the thesis. A methodology to select stator and rotor cooling concepts depending on the given requirements and boundary conditions is developed. The influence of characteristic thermal parameters on power density is studied. A prototoype induction machine is designed, built up, and measured based on the presented methodology to verify the given statements.