The VASIMR propulsion system is an ion propulsion system for spacecraft that uses magnetic fields to accelerate plasma to produce thrust. Undesired heat produced in the helicon section of VASIMR must be monitored and removed safely to avoid damage to system components, especially when higher power operating regimes are explored. This article demonstrates a strategy for distributed temperature estimation, based on OES measurement, and a model where the states represent the distributed temperature profile. OES provides a noninvasive measurement technique, which can be used as an output "correction" term for a state-estimation scheme. In this application, it is shown that the 2048 OES channels recorded can be accurately represented by only three principal components for temperature estimation. Use of the principal components as corrector terms in the state-space model dramatically improve model accuracy and the capability of the model to recover from unknown initial conditions and multiple system input changes.