We present a broadband lumped-element parasitic equivalent circuit to accurately capture the frequency response of electromagnetic (EM) interactions inside the structure and surrounding environment of high electron-mobility transistors (HEMTs). A new mutual inductance term is included to account for the high-frequency magnetic field coupling between device electrodes. An analytical method is also proposed, for the first time, to extract the gate-to-drain mutual inductance $L_{\mathrm {MGD}}$ , which creates an undesirable inductive feedback path from output to input at millimeter wavelengths. Based on the suggested extrinsic equivalent circuit, we propose a novel multi-step parameter extraction procedure that utilizes direct analytic extraction and linear regression techniques systematically to determine the parasitic component values. The accuracy and robustness of the presented extraction algorithm are established via comprehensive comparisons between EM simulations, measurements, and frequency responses of the suggested equivalent circuits up to and beyond 300 GHz in the millimeter-wave (mmW) band. The key parasitic elements that are most detrimental to the microwave performance are identified and optimized through subsequent circuit analysis. Design guidelines are provided for optimum device layout selection to achieve the highest frequency performance. It is demonstrated through a full-wave simulation based parametric study that around 20% improvement in maximum oscillation frequency is achievable via optimization of device gate finger number and unit finger width.