Abstract: This paper investigates a "latent" fault case in a 10 kV XLPE cable that exhibited severe localized overheating (71.6 °C) during infrared detection despite passing conventional insulation resistance and withstand voltage tests. By combining morphological analysis of the dissection and an equivalent circuit model, this study deeply explores the physical evolution mechanism of such defects. The findings indicate that local oxidation and the non-linear surge in resistivity of the semiconductive layer, caused by sheath damage, are the root causes of the fault. Unlike traditional partial-discharge-induced heating models, this paper proposes a mechanism of thermal generation driven by the synergistic effects of high-resistance leakage current and nonlinear dielectric loss. Theoretical derivations demonstrate that, within the defect microregion, electric field distortion and temperature rise form a positive feedback loop, leading to an exponential increase in local power density, while the macroscopic leakage current remains at the microampere level, thereby escaping detection by routine preventive tests. This study reveals the nonplused evolution characteristics of early latent thermal faults in cables and establishes the critical role of infrared thermography in condition-based maintenance of distribution networks.