A method for optimizing a decoupling capacitance for an on-chip temperature sensor is provided. A representative power supply waveform having noise is input into a simulation of the on-chip temperature sensor; a difference between a temperature representative input and a temperature dependent output of the on-chip temperature sensor is determined; and an amount of the decoupling capacitance is adjusted until the difference falls below a pre-selected value. A computer system for optimizing a decoupling capacitance for an on-chip temperature sensor is also provided. A computer-readable medium having recorded thereon instructions executable by a processor for optimizing a decoupling capacitance for an on-chip temperature sensor is further provided.