A method for detecting cell failure within a battery pack based on variations in the measured electrical isolation resistance of the battery pack is provided. The method includes the steps of monitoring the isolation resistance; determining when the isolation resistance falls below a preset value; and performing a predetermined response when the isolation resistance falls below the preset value. The method may include additional steps such as (i) determining how long the isolation resistance remains below the preset value; (ii) determining the rate of change in the isolation resistance; (iii) determining how long it takes for the electrical isolation resistance to recover; (iv) determining when the isolation resistance falls below a third preset value, wherein this step is performed after the isolation resistance recovers to greater than the second preset value; and (v) monitoring for a secondary effect associated with cell failure.