This study investigated the external short circuit (ESC) characteristics of 18650-type NCM lithium-ion batteries under different states of charge (SOC) and short-circuit currents. The research includes the macroscopic electro-thermal characteristics, microscopic morphology, structural damage, and internal damage evolution mechanism of short-circuited batteries. The tests provided an in-depth study of external short circuit (ESC) failure and thermal runaway (TR) behavioral characteristics. The results indicate that all the temperature changes of the short-circuit batteries were found to be in an upward and then downward trend. The surface temperature rise rate of batteries with low SOC were faster, and the maximum surface temperature rise of batteries with high SOC were higher. And with the increase of short-circuit current rate, the temperature rise gradually increased. In particular, thermal runaway occurred at 25C and the maximum temperature exceeds 500 °C. Different SOC batteries showed different degree of voltage fluctuation. The voltage curve of low SOC batteries showed “falling-rising-falling” trend with a brief platform. High SOC batteries formed a distinct voltage platform near 2.75 V. As the short-circuit current increased, the voltage platform shortened, followed by the rapid drop to zero. X-ray CT and SEM test results showed that the deformation of the battery jelly roll was mainly due to the separator shrinkage and tearing. Major changes occurred in the cathode and separator, including secondary particle rupture and irreversible pore blockage in the separator. The damage mechanism of ESC and its evolution are revealed. The results of this study can provide support for the research work on the thermal safety design of lithium batteries.