Microscopic infrared (IR) thermography has been used in steady-state mode for failure analysis since many years. However, its temperature resolution is limited to the order of 100 mK, and its spatial resolution is limited by the IR wavelength used (typ. 3...5 µm) to the order of 5 microns. In lock-in thermography (LIT), the power dissipation in the IC is periodically pulsed, the surface of the device is imaged by an IR microscope, and the incoming IR images are numerically processed and averaged on-line, according to the lock-in principle. After a certain averaging time of typically 1/2 hr, T-modulation amplitudes below 100 µK are detectable. This reduces the detection limit for local heat sources, compared to traditional IR microscopy, by a factor of 100 and thus greatly expands the application field of LIT in failure analysis if ICs. Moreover, lock-in thermography allows the display of images that are by nature free of the emissivity contrast, which usually disturbs steady-state IR microscopy images of ICs.