This article introduces new technologies for monitoring thermal response and life-time varying parameters of power electronic modules in real time without interrupting normal converter operation. The technologies are embedded in an adaptive thermal observer, which integrates temperature measurements and electrothermal models to estimate device losses and temperatures at reliability-critical locations of the power module. The observer structure includes a model reference adaptive system for adaptively calibrating device switching-loss models. This improves thermal monitoring accuracy, avoids time-consuming offline calibrations, and creates the opportunity for efficiency estimations during power module operation. The adaptive observer together with small-signal loss-excitation and system-identification technologies extract the thermal impedance of the power module in magnitude and phase over multiple frequency decades. This in situ thermal impedance spectroscopy has the unique feature of continuously providing information on the thermal interface of the power devices without interrupting normal inverter operation. The extracted information, i.e., life-time varying electrical and thermal parameters, enables diagnosing power module state-of-health with improved accuracy compared to prior technologies. It even allows separating different degradation effects, such as bond wire lift-off, device and base-plate solder delamination as well as deterioration of the convection process. With these new features, next generation monitoring systems can extract thermal response and degradation and thus protect power modules from severe thermal stress and overload. Furthermore, the obtained state-of-health information can be selectively used to reduce thermal stress and to schedule predictive maintenance leading to a safer and more reliable operation of future converter systems.