The third-order intermodulation distortion in AlGaN/GaN high electron mobility transistors fabricated on SiC substrate for power amplifier applications is reported in this study as a function of bias and temperature. The nonlinearity of active devices in terms of frequency and input power was demonstrated using two-tone intermodulation distortion measurements with a wide bias and temperature range. It is shown that the second derivatives of RF transconductance (Gm3) determined from two-tone measurements are directly related to the third-order intermodulation distortion (IMD) components. Furthermore, the third-order intermodulation distortion power was found to be minimum at the value of Gm3 is zero. An empirical analytical model for the nonlinearity of this device based on two-tone technique has been developed to highlight the influence of RF transconductance. The modelled data are shown to be consistent with measurement results giving a useful tool for studying these devices.