The effect of demagnetization on the magnetic properties of a rectangular ferromagnetic prism under nonuniform conditions is investigated. A numerical model for solving the spatially varying internal magnetic field is developed, validated, and applied to relevant cases. The demagnetizing field is solved by an analytical calculation and the coupling between applied field, the demagnetization tensor field, and spatially varying temperature is solved through iteration. We show that the demagnetizing field is of great importance in many cases and that it is necessary to take into account the nonuniformity of the internal field, especially for nonconstant temperature distributions and composite magnetic materials.