Eddy-shedding is a highly nonlinear process that presents a major challenge in geophysical fluid dynamics. Using the newly developed localized multiscale energy and vorticity analysis (MS-EVA), this study investigates an observed typical warm eddy-shedding event as the Kuroshio passes the Luzon Strait, in order to gain insight into the underlying internal dynamics. Through multiscale window transform (MWT), it is found that the loop-form Kuroshio intrusion into the South China Sea (SCS) is not a transient feature, but a quasi-equilibrium state of the system. A mesoscale reconstruction reveals that the eddy does not have its origin at the intrusion path, but comes from the Northwest Pacific. It propagates westward, preceded by a cyclonic (cold) eddy, through the Kuroshio into the SCS. As the eddy pair runs across the main current, the cold one weakens and the warm one intensifies through a mixed instability. In its development, another cold eddy is generated to its southeast, which also experiences a mixed instability. It develops rapidly and cuts the warm eddy off the stream. Both the warm and cold eddies then propagate westward in the form of a Rossby wave (first baroclinic mode). As the eddies approach the Dongsha Islands, they experience another baroclinic instability, accompanied by a sudden accumulation of eddy available potential energy. This part of potential energy is converted to eddy kinetic energy through buoyancy conversion, and is afterwards transferred back to the large-scale field through inverse cascading, greatly reducing the intensity of the eddy and eventually leading to its demise. This article is protected by copyright. All rights reserved.