AbstractSolid‐state transformers (SSTs) have applications in medium‐voltage (MV) DC grids and compact power systems. High‐frequency transformer (HFT) is the core component of SSTs. High levels of high frequency high dv/dt voltage stresses challenged the integrity of the galvanic insulation of HFTs. However, dielectric thermal runaway and resultant electrical failure mechanisms in epoxy resin (EP) cast insulation remain unclear. Dielectric heating of EP across varying voltages, frequencies, rising edges, duty cycles and DC biases were measured and corroborated by simulation. The thermal runaway threshold mainly depends on the tangency point of the loss generation and heat dissipation curves below the glass transition temperature. Observations reveal that thermal runaway does not directly cause breakdown; instead, thermal decomposition above 200°C triggers discharge and eventual failure. Simulations demonstrate that temperature rise mainly depends on the average field within the electrode region and inter‐segment and inter‐layer distances within the HFT winding definitively impact insulation thermal runaway. By applying different criteria for MV and high‐voltage (HV) transformers, the reference electric fields for insulation design with unfilled and filled EP were obtained. For instance, limiting dielectric heating below 5 K at 50 kHz necessitates an RMS average field less than 0.44 V/mm, which is much lower than dry‐type transformer conventions. The authors prove the necessity of re‐evaluating the permissible field strength in HFT insulation design.