Shear-heating induced localization has been suggested as a potentially important mechanism for breaking the lithosphere. Yet, the physical parameters that control the onset of this instability remain unclear. We therefore performed systematic 2-D simulations of visco-elasto-plastic lithospheric deformation in which we addressed the effects of various parameters and we found that a sharp transition exists between localizing and non-localizing regimes. In a next step we develop a semi-analytical model that combines scaling laws with a 1-D lithospheric deformation model. We show that the 1-D model successfully predicts the occurrence of shear localization in 2-D models, if the thickness of the plastically deforming part of the (lower) lithosphere is employed as characteristic length-scale. An application of the 1-D model to the terrestrial planets shows that this type of shear-localization is expected to occur most readily on Earth.