The failure of the high silica/phenolic resin insulation layer under extreme thermal conditions has become an important reason for the trouble of solid rocket motors. A great number of studies have shown that the arrangement of reinforcement fibers is a significant factor in the failure of fiber-reinforced plastic. In this paper, the thermal and mechanical properties of the high silica/phenolic resin insulation layer with different arrangements were analyzed, and the causal relationship between the failure of the insulation layer and the arrangement of reinforcement fibers was given. Two types of heat-insulating layers with strong arrangement and weak arrangement were designed. After the SRM firing test, it is concluded that the essential reason for the failure of the insulation layer is the strength anisotropy caused by the weak arrangement of reinforcement fibers. Besides, the reinforcement fibers of strong arrangement are distributed in all directions, which compensates for the axial strength defects of the weakly arranged insulation layer.