This paper investigates the faulty characteristics and develops an identification method to distinguish connecting and increased internal resistance faults in the parallel-connected lithium-ion battery pack. On one hand, the experiments under faulty conditions are conducted. A novel method for collecting cell voltage is adopted to reflect the difference in the tab voltage. The incremental capacity is analyzed to clarify the reason for the capacity loss of the battery pack. The current and temperature are also discussed to investigate the characteristics. On the other hand, an identification method is proposed based on the experiments. The parallel-connected battery unit is regarded as a large battery. The parameters of the large battery are estimated by recursive least squares. It is judged whether the large battery has a loose connection or internal resistance increases by the estimated resistance and its standard deviation. Then, combine with the tab voltage and temperature, the specific faulty cell is identified. The fault is considered as the second level. When the temperature difference among cells exceeds 5°C, the fault deteriorates to a first level. The estimated resistance, the tab voltage, and the temperature are used as faulty indicators, which jointly determine the specific fault type and position.