Abstract: Cross-linked polyethylene (XLPE) cable main insulation is highly susceptible to moisture in humid environments, leading to water treeing and insulation degradation. To enable rapid on-site diagnosis, a handheld near-infrared spectroscopy system for moisture measurement in XLPE insulation based on characteristic bands was presented. A dual-band ratio model was established with 1700 nm as the reference band and 1940 nm as the detection band, effectively minimizing thickness variation, baseline drift, and scattering effects. Spectral analysis showed that the 1940 nm band offered superior dynamic range and sensitivity retention over 1450 nm, making it more suitable for quantitative moisture detection. A least-squares calibration yielded a coefficient of determination (R²) of 0.989, confirming strong agreement between predicted and measured values. The handheld prototype developed based on this model was validated under laboratory and field conditions, with deviations from the oven-drying standard kept within 3%. These results demonstrated that the system provided rapid, robust, and quantitative detection of moisture in XLPE insulation, providing an effective technical tool for cable operation maintenance and lifetime management.