As technology scales, power consumption and thermal effects have become challenges for system-on-chip designers. The rising on-chip temperatures can have negative impacts on SoC performance, power, and reliability. In view of this, we present a hybrid optimization approach which aims at temperature reduction and hot spot elimination. We demonstrate that considerable improvement in the thermal distribution of a design can be achieved through careful voltage island partitioning, voltage level assignment, and voltage island foorplanning. The experimental results on MCNC benchmarks show significant improvement on the thermal profiles. To the best of our knowledge, this is the first work to explore the thermal impacts of voltage islands.