The signal transmission module of a magnetic nanoparticle thermometer (MNPT) was established in this study to analyze the error sources introduced during the signal flow in the hardware system. The underlying error sources that significantly affected the precision of the MNPT were determined through mathematical modeling and simulation. A transfer module path with the minimum error in the hardware system was then proposed through the analysis of the variations of the system error caused by the significant error sources when the signal flew through the signal transmission module. In addition, a system parameter, named the signal-to-AC bias ratio (i.e., the ratio between the signal and AC bias), was identified as a direct determinant of the precision of the measured temperature. The temperature error was below 0.1 K when the signal-to-AC bias ratio was higher than 80 dB, and other system errors were not considered. The temperature error was below 0.1 K in the experiments with a commercial magnetic fluid (Sample SOR-10, Ocean Nanotechnology, Springdale, AR, USA) when the hardware system of the MNPT was designed with the aforementioned method.