In this work, the intrinsic reason for the premature failure of a 316 stainless steel heat exchanger tube in geothermal water environment is disclosed. The chemical composition of the tube was tested, and the microstructure was examined for material inspection. Fracture morphology and secondary cracks were analyzed, and electron backscattered diffraction was applied to explore the crack propagation mode. The corrosion morphology was observed. The electrochemical behavior was studied with cyclic polarization and double-loop electrochemical potentiokinetic reactivation. It is found that the main failure cause was stress corrosion cracking (SCC). Attacked by chloride ions, the tube is susceptible to SCC under the residual stress as a result of the substandard Mo and Ni content. The SCC mechanism is localized anodic dissolution, and the propagation mode is a mixture of transgranular SCC and intergranular SCC.