To improve the heat dissipation performance of Nd:YAG lasers, sandwich-type Nd:YAG laser crystal with a diamond cap is analyzed by using a 2D numerical model, and the effect of the diamond cap thickness on the temperature distribution and thermal aberration is investigated. The simulation results reveal that the diamond cap with a thickness of 1 mm can reduce the maximum temperature inside the Nd:YAG to 309.7 K, which is 38 K lower than that of the laser crystal without a cap. Thermal aberration causes the optical path difference (OPD) inside laser crystal, and the total OPD of the Nd:YAG with the 1-mm-thickness diamond cap is lower compared to that of Nd:YAG without or with a 1-mm-thickness YAG cap. As the diamond cap thickness increases from 0.2 mm to 1 mm, the maximum temperature inside Nd:YAG decreases by 2.3 K and the near-axis OPD of the composite structure changes from negative to positive. Moreover, the spherical thermal aberration is described by the dioptric power and the absolute value of the dioptric power decreases with the increase of the diamond cap thickness. The dioptric power reaches zero at a diamond cap thickness of 0.59 mm, which means that a certain thickness of diamond cap can correct spherical thermal aberration. Therefore, to achieve better laser beam quality and higher output power, the optimal thickness of the diamond cap can be designed by considering the effects of temperature distribution and thermal aberration of the laser crystal.