A theoretical model of thermal ion and electron temperatures in Saturn's inner magnetospheres is presented. The model is based on a fast mode of radial diffusive plasma transport with a diffusion time scale which varies with distance as &tgr;D=2¿106 s (6/L)3. Such a model provides a conceptual organization to the energy balance problem in that the plasma residence time in the region L>4.5 is short compared to the time scale for Coulomb energy exchange and radiative losses, where as the opposite is true in the region L<4.5. This condition implies that in the Dione--Tethys plasma torus the ion and electron temperatures reflect their initial values upon creation out of the neutral H2O cloud distributed throughout the region. Oxygen ions thus have a temperature corresponding to local pickup by the magnetic field and a large perpendicular temperature anisotropy, while electrons have a temperature corresponding to that of ionization secondaries created by electron impact dissociation/ionization of H2O by the ambient hot electron population. In the collisional L<4.5 regime the ion temperature is controlled by local pickup from O+-O charge exchange, while the electron temperatures is controlled by heating from thermal O+ ions against radiative losses from electron-excited OII. A calculation of the off-equatorial behavior of density and temperature in the Dione--Tethys torus based on the assumption of a constant ion temperature anisotropy along field lines is also described. The model successfully reproduces the decrease with latitude in electron and O+ temperatures which occur as a result of the interaction of electrons with the ambipolar electric potential and O+ ions with the centrifugal potential. ¿ American Geophysical Union 1993