Electrolyte leakage is one of the typical faults that lead to battery failure, and its failure mechanism is still ambiguous. Therefore, it is crucial to investigate the experimental method and failure mechanism of lithium-ion battery electrolyte leakage. The electrolyte leakage behavior of commercial lithium-ion batteries is imitated by controlling the leakage location, extent and duration in the study. The evolution characteristics of external comprehensive performance are quantitatively evaluated. Furthermore, a thermodynamic investigation method combining in-situ synthesis and ex-situ disassembly is performed to reveal the equilibrium potential degradation mechanism. The intrinsic property of kinetic degradation is explored based on the electrochemical impedance interconnection of half-cell and full-cell. Eventually, the dominant degradation of the negative electrode active material and the most serious deterioration of the negative electrode charge transfer process are illustrated. Moreover, attractive phenomena of the voltage plateau during relaxation and the current peak at the constant-voltage charging stage are detected, indicating the potential lithium plating. The detection results based on X-ray diffraction (XRD) and scanning electron microscopy (SEM) technology corroborate the destruction of the negative electrode and the existence of lithium plating. The disclosure of performance failure mechanisms and diverse characterizations provides support for the electrolyte leakage fault diagnosis method.