An embedded system that handles critical applications requires power economy, performance and thermal management, and an efficient Vedic processor with highly efficienct thermal conductivity. The proposed contemporary processor architecture has been designed to use Vedic mathematics and elaborate power and thermal optimization approaches to formulate an Arithmetic Logic Unit (ALU). This ALU is based on Vedic Sutras to enable quick computation, high precision floating point operations, and low power consumption. Since thermal management leads to energy loss in the form of heat, the embedded processor’s thermal conductivity is enhanced using novel materials and unique ways of heat dissipation. This improves performance as well as power efficiency. The proposed approach uses extensive simulation thermal analysis by EDA tools to build an optimised embedded processor that consumes 35% less power, has 40% high thermal conductivity, is 25% faster, and utilizes 15% less area when compared to conventional embedded processors. This paper helps in furthering embedded systems research by showing how old mathematical ideas can be used in a new engineering approach to solve current technology issues. The suggested novel embedded system is more efficient and thermally resistant for IOT, mobile computing, and industrial control systems.