Abstract: The main components of precision horizontal lathes are subject to thermal deformation arising from the combined influence of internal and external heat sources, which may significantly affect the machining accuracy. Data-driven thermal error modeling methods provide an effective means of addressing this issue, while clarifying the key thermal error elements and their conduction mechanisms can further enhance the modeling efficiency, accuracy and robustness of the lathe thermal error. This paper focuses on the source tracing test of four key thermal error elements of the lathe: X-axis screw frictional heat, spindle heat, Z-axis saddle heat, and heat of hydraulic turret and drag plate. Based on the tracing analysis results, a thermal error model was established, and a real-time compensation system was developed. The turning validation experiment results show that the machining error of the lathe after compensation was stably reduced by over 75% during repeated machining and cooling processes, which revealed that the proposed method effectively improved the machining accuracy and stability of the lathe.