In this paper, the average power handling capability (APHC) of microstrip passive circuits considering the metal housing and environment conditions is investigated in detail. A systematic method is proposed for the computation of the APHC of microstrip circuits in open and enclosed metal housing configurations, typically used in microwave components. The method also yields an estimate of the maximum temperature in a microstrip circuit for a given input power. Closed-form equations accounting for external conditions, such as convection or radiation heat transfer are given to evaluate the APHC. For validation, two microstrip bandstop filters centered at 10 GHz are analyzed following the proposed model, and the results are compared with those simulated showing a good agreement. In addition, both circuits are fabricated and characterized. Thermal profile measurements are provided, confirming the predicted results. The effect of the topology layout and the electromagnetic performance on the APHC are also discussed.