Experimental data fromz‐cut LiNbO3Mach–Zehnder interferometers show that electrical contact to the device electrodes leads to the large thermal instability of the intrinsic phase bias. Withdrawing contact from the electrodes causes the thermal instability to virtually disappear. A model is proposed in which contact to the electrodes creates strong gradients in the local surface potential near the electrodes when unscreened pyroelectrically induced surface charges are present, independent of whether the probes are floating or grounded. The resulting differential electric field strength in the interferometer branches gives rise to the observed thermal instability, which is five orders of magnitude larger than the calculated instability due to the pyroelectric effect alone. The model of the instability mechanism is used to suggest methods of reducing the instability.