One embodiment of the present invention provides a system that performs a real-time root-cause-analysis for a degradation event associated with a component under test. During operation, the system monitors a telemetry signal collected from the component, and while doing so, attempts to detect an anomaly in the telemetry signal. If an anomaly is detected in the telemetry signal, the system performs a failure analysis on the telemetry signal in real-time while the telemetry signal is degrading. Next, the system identifies a failure mechanism for the component based on the failure analysis.