Abstract: Underground high-voltage cables are the main channel for urban power transmission. Tunnels usually contain multiple cable circuits in close proximity that share the same grounding network. Electromagnetic coupling among these circuits and the connection of multiple sheath loops result in the sheath currents that exceed the standard, but maintenance engineers often find that the grounding system is electrically healthy after thorough inspections. Models for cable circuits in close proximity with a shared grounding system in the presence and absence of faults are established in this paper. The sheath currents in the cable circuits with different scenarios of cable layout, sharing of grounding points, and minor section lengths are analyzed. The distribution characteristics of the sheath currents in the cable circuits containing various faults are evaluated by the mean values and deviation values of the sheath currents. The diagnostic criteria are proposed according to the characteristics of the sheath currents. The results show that the mean values of currents in three sheath loops of the same circuit are relatively close in the grounding system in the absence of faults, and the deviation values are within the range of the capacitive current generated in this segment. Open-circuit faults reduce the average current in the sheath loop, while short-circuit faults increase the difference among currents in the same sheath loop measured at different positions. Fault diagnosis relies only on measurements of sheath currents and does not require measurement of load currents or calculation of theoretical values under normal conditions. The method can be conveniently applied in the field.