A method and system for the diagnosis of anomalies in a lead attached to an implantable medical device, such as an implantable cardioverter defibrillator (ICD), including an insulation breach resulting in a short circuit of the high-voltage shock pulse. Determination that the defibrillation pathway is shorted may be made by initial analysis of a Reference EGM and Diagnostic EGM and subsequent analysis of Differential Diagnostic EGMs. Upon determining if a specific defibrillation pathway is shorted, the nonessential defibrillation electrode of that pathway may be excluded from the defibrillation circuit, delivering defibrillation current only between functioning defibrillation electrodes. Alternatively, the ICD system can confirm the presence of a lead anomaly with one or more alternative diagnostic approaches. Patient and remote-monitoring alerts may be initiated.