With the increasing demand for power supply reliability, online monitoring techniques for cable health condition assessments are gaining more attention. Most prevailing techniques lack the sensitivity needed to detect minor insulation defects. A new monitoring technique based on the harmonic anomaly feature analysis of the shield-to-ground current is introduced in this paper. The sensor installation and data acquisition are convenient and intrinsically safe, which makes it a preferred online monitoring technique. This study focuses on the single-core 10 kV distribution cable type. The research work includes the theoretical analysis of the cable defect’s impact on the current harmonic features, which are then demonstrated by simulation and lab experiments. It has been found that cable insulation defects cause magnetic field distortion, which introduces various harmonic current components, principally, the third-, fifth-, and seventh-order harmonic. The harmonic anomaly features are load current-, defect type-, and aging time-dependent. The K-means algorithm was selected as the data analysis algorithm and was used to achieve insulation defect prediction. The research outcome establishes a solid basis for the field application of the shield-to-ground harmonic current monitoring technique.