Steel pipelines, buried in cold regions, often respond to thermal strains and/or geotechnical movement caused by factors such as thaw settlement, frost heave, and slope instability. These complex field conditions can impose large displacements on these pipelines, resulting in localized wrinkles well into the plastic range of the pipe material. Eventually, there is a possibility of a fracture occurring at a wrinkled location under continuous deformation. A recent field fracture and a failed laboratory specimen have been observed within a telescopic wrinkle under tearing action and the loading histories have been found to be monotonic, without significant strain reversals. These incidents underscore the need for a detailed investigation, which seeks to answer fundamental questions regarding this unique mode of failure. In this study, a finite element model has been developed, which is capable of accounting for material nonlinearity effects, large displacements, large rotations, initial imperfections, and possible complex contact surfaces. Based on limited test data, the comparison of the numerical and the experimental results demonstrates the ability of the present model to predict the local buckling behavior of pipes when deformed well into the postwrinkling range. The results of this analytical work include the global and local deformation patterns and a detailed assessment of the stress-strain relations at the region of the telescopic wrinkle. The results obtained from this study have recognized the occurrence of strain reversal at the sharp fold of the wrinkle on the compression side of the pipe, a phenomenon that could be considered to be the key factor for triggering this unique failure mechanism.