A new computer code using the finite element method, named PAP (Pellet Analysis Program), is developed for the more exact analysis of the steady-state three-dimensional thermo-mechanical behavior of the fuel rod system. The main advantage of the present code is its ability of the more exact analysis of the fuel rod system which is in contact, and that of the cracked fuel rod system. In the development of the code, the isoparametric finite element formulation is adopted, and the Galerkin``s technique is used in the derivation of the thermal element equation, and the principle of virtual displacements is used in the derivation of the displacement element equation. In order to validate the code, PAP, the temperature distribution of a fuel rod with no gap region and the thermoelastic stress distribution of a cylinder with a concentric circular hole are calculated and compared with the analytical solutions. Comparisons of the results predicted by PAP to the analytical solutions show quite good agreements within one to two percent errors. The temperature distribution, deformation, and the thermoelastic stress distribution of the fuel rod system, which are calculated by PAP, show correct qualitative trends.