On 32 bit architecture the JBoss process can allocate at max. 2GB of memory. 
You gave it 1GB of heap. Plus some PermGen. The rest is available to stack 
space. Every thread allocates its own stack. This may be 256kb to 1MB depending 
on your platform (see you JVM documentation). It's a simple calculation how 
many threads you can spawn like so.

1. Reduce the number of threads: reduce MDB / EJB pools, reduce number of 
EJBs/MDBs/timers.
2. Reduce your heap (-Xmx parameter) to make more memory available to the stack
3. As a last resort reduce your stack size (-Xss parameter)

Use jconsole to see how much memory you really need in heap and permGen.

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