In this study, phase change material (PCM) is used internally and externally in managing the heat generation of cylindrical Li-ion batteries during high rate discharges. Both internal and external cooling systems are thoroughly compared in their cooling effect on batteries of different sizes (18650, 21700, and 26650) and radial thermal conductivities, their cooling effect on battery packs of different layers (2, 4, and 8 layers of batteries), the necessity using high thermally conductive PCM in the cooling systems, as well as their weight and volume added to the battery system. Results show that the internal cooling system is more suitable for high specific energy applications. It is less sensitive to the battery radial thermal conductivity and performs better for large battery packs and thick batteries. While the external cooling system is more space-saving and suitable for 2-layer battery packs with forced convection applied at the battery pack side walls. However, its performance deteriorates as the thermal conductivity of PCM and batteries decreases.