10 kV overhead lines are equipped with sheaths to avoid short-circuit tripping caused by tree-line faults and to ensure power supply continuity. However, the sheath is mostly made of polyethylene (PE), whose hydrocarbon molecular structure determines its flammability, posing a fire risk. Once a fire occurs in the outer sheath and spreads along the line, it may lead to even more severe incidents. Understanding the fire spread characteristics of the sheath after ignition is important for guiding fire early warning and ensuring safe disposal of 10 kV overhead power lines equipped with protective sheaths. Thus, a combustion model of the overhead line outer sheath is established using Fire Dynamics Simulator (FDS). The effects of wind speed, sag angle, and flame retardant characteristics on fire spread are investigated. The results show that when the wind speed increases from 0 m/s to 5 m/s, the fire spread shows an expanding trend, the spread rate increases by 141.7%, and the flame intensity reaches its maximum. When the wind speed increases to 7 m/s, a suppression effect on fire spread is observed. The sag angle significantly affects the fire spread rate. As the sag angle increases from 0° to 20°, the total time required for fire spread is reduced by nearly 47%. After the outer sheath is treated with different levels of flame retardant, the fire spread distance within 200 s is shortened from 3.73 m to 2.85 m and 1.88 m. Meanwhile, the peak heat release rate decreases, effectively delaying the fire spread trend and reducing the fire hazard. The research results can provide theoretical support for the fire safety design and preventive protection of overhead power lines with protective wire sleeves.