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