Thermite reactions have many uses. It is not an explosive; instead, it operates by exposing a very small area to extremely high temperatures. Intense heat focused on a small spot can be used to cut through metal or weld metal components together both by melting metal from the components, and by injecting molten metal from the thermite reaction itself. 
Thermite may be used for repair by the welding in-place of thick steel sections such as locomotive axle-frames where the repair can take place without removing the part from its installed location.
Thermite can be used for quickly cutting or welding steel such as rail tracks, without requiring complex or heavy equipment. However, defects such as slag inclusions and voids (holes) are often present in such welded junctions, so great care is needed to operate the process successfully. The numerical analysis of thermite welding of rails has been approached similar to casting cooling analysis. Both this finite element analysis and experimental analysis of thermite rail welds has shown that weld gap is the most influential parameter affecting defect formation. Increasing weld gap has been shown to reduce shrinkage cavity formation and cold lap welding defects, and increasing preheat and thermite temperature further reduces these defects. However, reducing these defects promotes a second form of defect: microporosity. Care must also be taken to ensure that the rails remain straight, without resulting in dipped joints, which can cause wear on high speed and heavy axle load lines.
A thermite reaction, when used to purify the ores of some metals, is called the , or aluminothermic reaction. An adaptation of the reaction, used to obtain pure uranium, was developed as part of the Manhattan Project at Ames Laboratory under the direction of Frank Spedding. It is sometimes called the Ames process.
Copper thermite is used for welding together thick copper wires for the purpose of electrical connections. It is used extensively by the electrical utilities and telecommunications industries (exothermic welded connections).