Thermal runaway propagation (TRP) in lithium batteries poses significant risks to energy‐storage systems. Therefore, it is necessary to incorporate insulating materials between the batteries to prevent the TRP. However, the incorporation of insulating materials will impact the battery thermal management system (BTMS). In this article, the influence of aerogel insulation on liquid‐cooled BTMS is analyzed employing experiments and simulations. In the experiment results, it is revealed that aerogel reduces heat dissipation from liquid‐cooled battery packs, leading to elevated peak temperatures and steeper temperature gradients. Simulation of battery pack discharge warming based on the 3D model shows that the result matches very well with that in the experiment., indicating a maximum temperature rise from 34.92 to 42.57 °C at 2C when aerogel thickness is increased to 5 mm, alongside a temperature differential expansion from 11.11 to 17.50 °C. Nonetheless, beyond 3 mm thickness, further increases in aerogel thickness cause negligible (<0.1 °C) temperature alterations, defining the saturation thickness of aerogel. Furthermore, maintaining consistent thickness and stacking more aerogel layers do not mitigate its detrimental effects. Interestingly, augmenting the battery's through‐thickness thermal conductivity counteracts the adverse outcomes of aerogel usage.