Thermal management systems (TMSs) working for electronics packages under harsh environments like intense thermal radiation are challenging due to external thermal interactions. Thermal insulation protection for TMS is very critical in these harsh conditions. An experimental setup was developed to analyze the effect of insulation protection against thermal irradiation over a pumped liquid-cooling active thermal management system (ATMS) with varying heat dissipation rate (0–4.2 kW/m2), thermal irradiation (0.85–3.80 kW/m2), and coolant temperature (15–25 °C). Three configurations of ATMS are considered in the experimental study: ATMS without thermal insulation protection, ATMSs integrated with Cellulose Fibre Insulation (CFI), and Vacuum Insulation Panel (VIP). The effect of insulation on each parameter in all three ATMS configurations over the temperature of the electronics component, cooling load, and nature of heat flow in ATMS was analyzed. VIP outperformed CFI on achieving a significant reduction in the temperature of electronics systems (35.67%) and cooling load (45.64%) experienced by the ATMS. VIP effectively reduced the impact of temperature and cooling load change in ATMS against change in thermal irradiation. The study concluded that thermal insulation protection was most effective at high thermal irradiation and low heat dissipation rate. Heat Flow Direction Index (HFDI) concept was developed to find the nature of heat transfer direction in ATMS without temperature distribution trend. Heat generation rate and irradiation possess significant influence over the nature of heat flow direction.