Temperature variation from dynamic cable loading affects the propagation characteristics of transient signals. The distortion of modal signal components as a function of temperature in a three-phase medium-voltage cable is investigated. The temperature influence arises mainly through the complex insulation permittivity, which has a non-linear relationship with temperature. Near the maximum operating temperature of the cross-linked polyethylene insulation, the propagation velocity increases by 0.56% per degree centigrade but is an order of magnitude less sensitive at ambient temperature. The paper presents modeling results based on cable impedance and admittance matrices obtained from electromagnetic field simulation, taking into account the time-varying temperature distribution in the cable cross-section. The results are verified by applying Rayleigh–Schrödinger perturbation analysis. In the time domain, signal patterns shift when the modal propagation velocities change upon cable loading. Moreover, separation of degenerate modes is observed when the cable phase conductors carry an unbalanced current. The perspectives for exploiting the temperature dependency of signal propagation for pinpointing cable defects and for dynamic rating of underground power cables are discussed.