This manuscript focuses on the local overheating problem of phase C of the lightning arrester on the medium voltage side of a certain AC 220kV transformer. Based on on-site live testing and analysis of the test results after disassembly, it is determined that the direct cause of overheating is internal insulation discharge breakdown. Through multi physical field simulation analysis, it was found that the rubber insulation sleeve on the outer side of the lightning arrester valve plate is affected by moisture and temperature rise. The local conductivity along the surface increases, leading to an increase in the active component of the current at that location. This further intensifies local heating and, together with water, causes a decrease in the insulation performance of the rubber sleeve, ultimately leading to discharge and breakdown. The quantum chemical calculation results indicate that under AC voltage, rubber sleeves are more prone to discharge, leading to heating and insulation breakdown accidents compared to zinc oxide valve plates. Based on the above multiple data source analysis, a theoretical basis and guidance suggestions for improving the structural and material design to enhance the operational reliability of lightning arresters are proposed.