Adding an insulating sheath to the exposed metal part of the outer insulation of a roof cable terminal can extend the creepage distance of the leakage current and significantly reduce the probability of pollution flashover on the outer insulation of the equipment. However, during the actual operation of the locomotive, the inner surface of the insulating sheath is discharged, resulting in cable insulation breakdown, the mechanism of which is unclear. This paper establishes a cable terminal–sheath electric field simulation model and studies the interface air gap, the interface with wet pollution, and the distribution of damp pollution on the outer surface and other factors on the electric field distribution of the cable terminal–sheath structure and the interface discharge, revealing the mechanism of discharge on the inner surface of the cable terminal’s insulation sheath. A voltage of 25 kV rms is applied, and the simulation results show that when the outer surface of the cable terminal is clean and there are air gaps and wet dirt on the inner surface, the maximum distortion electric field at the inner surface is 0.8 × 105~3.4 × 105 V/m, and the value of the electric field at this time is not enough to cause a partial discharge; when there is a uniform layer of wet dirt on the outer surface of the cable terminal, the electric field on the inner surface averages 1.5 × 105 V/m, which is about 275% higher than the average electric field when the outer surface is clean; when there is wetting or an air gap on the inner surface at the same time, the maximum aberration electric field on the inner surface is 1.8 × 105~1.9 × 106 V/m. The wetting on the outer surface of the cable terminal strengthens the non-uniformity degree of the distribution of the electric field, and when there is wetting and an air gap on the inner surface, the over-voltage on the cable terminal inevitably leads to a discharge phenomenon in the air gap. This provides a theoretical basis for optimizing the insulation sheath structure to solve the discharge problem.