The magnetic properties of electrical steel sheets are affected by magnetization patterns, working temperature, and external pressure. In order to study the temperature effect of electrical steel sheets on the temperature rise of a transformer core, in this paper, based on the magnetic property test system of an electrical steel sheet, the permeability and loss of a 50AW600 grain non-oriented electrical steel sheet and a 30ZH120 grain oriented electrical steel sheet under different temperatures and excited frequencies were measured, and the influence of temperature on the properties of the material was analyzed. A magneto-thermal iterative coupling method considering the temperature effects of magnetic properties in the electrical steel sheet was investigated. Based on the above measurement data and iterative coupling method, the temperature distribution of the core of a 500-kV power transformer was simulated and analyzed, and compared with the simulation results of the traditional coupling method without considering the temperature effect of the electrical steel sheet. Magneto-thermal coupling simulation under no-load operation is a symmetrical problem. It was found that the temperature of the hottest spot of the transformer core calculated by the magneto-thermal iteration method proposed in this paper was significantly reduced, the temperature of the hottest spot on the core column was about 45 °C, and the temperature of the hottest spot on the upper and lower yoke was about 39 °C, which provides an effective simulation method for accurately calculating the temperature rise distribution of electrical products such as transformers.