One of the most significant concerns in lithium-ion batteries (LIBs) is thermal runaway (TR), which is triggered by massive and localized temperature rise generally due to internal short circuit (ISC), leading to separator failure and eventually reaching the ignition point. To address this challenge, a nitride-based ceramic-coated separator (CCS) with a higher thermal conductivity than that of a bare polyethylene (PE) separator and conventional oxide-based CCS (thermal conductivity of PE separator, Al2O3-CCS, and AlN-CCS = 0.15, 0.91, and 4.54 W m−1 K−1, respectively) was used. This highly thermally conductive coating layer effectively reduced the maximum temperature and mitigated the accumulation heat at local spots by distributing heat at a high rate through the in-plane direction. Despite the experimental limitations to analyze in-operando analysis of thermal behavior within the cell, we demonstrate the effect of high thermal conductivity of separators through two reliable simulation models: ideal ISC and nail penetration models. In the ideal ISC model, the maximum temperature can be reduced even under various states of charge (10–100%) and dendrite diameters (1, 3, 5, 7, and 9 μm) due to the rapid heat dissipation of thermally conductive AlN coating layer. Furthermore, the peak temperature of the nail penetration model of AlN-CCS was approximately 13 °C lower than that of the bare PE separator. These findings suggest that CCSs with high thermal conductivity can be one of the emerging strategies for mitigating the risk of TR, thereby enhancing the safety of LIBs.