To conduct a comprehensive investigation into the nail penetration thermal runaway (TR) characteristics of 16 Ah/5 Ah lithium‐ion batteries (LIBs) and their modules. The study aims to analyze the burst characteristics and examine the variations in TR behavior under specific conditions, with the goal of improving early warning and protection against LIB TR incidents. The research findings demonstrate that mechanical nail penetration can rapidly trigger TR, resulting in the highest temperature 522.3°C within 51.9 s, and the fastest is 20 s. In the case of LIB modules, a secondary temperature rise occurs, exhibiting an increased rate of up to 77%. Notably, when the battery bulges, there is a release of high‐temperature two‐phase heat flow accompanied by a significant discharge of combustible gases. This escalation increases the risk of further explosions. Moreover, the study observes repeated spray fires and the generation of a considerable amount of smoke. Additionally, the study highlights the role of sudden rise in temperature and the release of H2 as early indicators of TR. These findings provide valuable theoretical insights into the characteristics and risks of square soft LIBs, enhance safety measures, and contribute to the development of early warning systems for LIBs.