Timely identification of early internal short circuit faults, commonly referred to as micro short circuits (MSCs), is essential yet poses significant challenges for the safe and reliable operation of lithium-ion battery (LIB) energy storage systems. This paper introduces an innovative diagnostic method for early internal short circuits in LIB packs, utilizing dynamic time warping (DTW) applied to incremental capacity (IC). Initially, the terminal voltages of all cells within the LIB pack are ordered at any moment to determine the median terminal voltage, which is then used to generate the median IC curve. This curve acts as a reference benchmark that represents the condition of healthy cells in the pack. Subsequently, the DTW algorithm is utilized to measure the similarity between each cell’s IC curve and the median IC curve. Cells exhibiting similarity scores that exceed a specified threshold are identified as having MSC faults. Lastly, for the cells diagnosed with MSC conditions, a method for estimating short-circuit resistance (SR) based on variations in maximum charging voltage is devised to quantitatively evaluate the severity and evolution of the MSC. Experimental findings reveal that the proposed method effectively identifies MSC cells in the LIB pack and estimates their SRs without the necessity of a battery model, thereby affirming the method’s validity.