The use of power electronics is growing extensively in applications such as the automotive field, lighting, power supplies, motor drives, etc. The ultimate goal is to make power electronics as transparent to the final user as possible, which means little extra cost, use of existing space and little or no extra thermal management. This sets very stringent requirements on power electronics concerning performance, cost and size. It has been recognized that the physical construction of power electronic converters represents one of the main frontiers in fulfilling these ever-increasing requirements. This thesis deals with improving the physical implementation of power electronic converters by increasing the level of integration through the use of multifunctional parts. A systematic approach to integration and packaging, on the basis of power electronic converters construction parts and functions that the parts perform, is introduced. Methods of reducing the number of construction parts in the converter by integrating the functionality of several parts into one are devised. This includes not only electrical and thermal (functional) parts but also non-electrical (packaging) parts, since packaging parts represent a large portion of the total number of parts in a converters assembly. Furthermore, technologies that can be used to implement these methods in converters are reviewed. The integration methods and technologies are merged into an algorithm that maps the design of the fundamental functions (electrical and thermal) onto the design of physical parts. Lastly, a tool for choosing the optimal solution among different construction technology options derived in the introduced algorithm is presented.