Hamilton was forced to withdraw from the race in Melbourne after his engine dropped a cylinder at the start of the race.
The team initially suspected a wiring issue was to blame, but it has now revealed that the real cause was a small split in the side of the blue rubber tube.
The tube is supposed to insulate the current flow in to the plug, but the tiny split led to the spark cutting a hole clean through its side instead.
Mercedes believes that this hole developed over the Melbourne weekend and unfortunately led to the spark shorting on to the cylinder head on the formation lap - causing the engine problem.
Mercedes' F1 engine chief Andy Cowell told AUTOSPORT: "It is really frustrating.
"The hole was blown through the side of the rubber tube - and it shorted through the rubber boot across to the cylinder head.
"The hole was eroded by the spark jumping across. It meant that at low demand it was still working - so idle and the parade lap was fine - but as soon as it went to full load the spark would rather jump the rather large gap to the cylinder head then the gap to the plug."
It is the first time that Mercedes had encountered such a problem throughout all its bench testing, track test and race running.
Following inspection of all the identical rubber tubes used by its teams in Melbourne, Hamilton's was the only one that had failed - although similar faults were discovered in tubes in Mercedes' Brixworth factory stores.
To prevent a repeat, Mercedes has refined the manufacturing process of the tubes to get rid of the seams where the fault developed - so they are now injection moulded - and it has thickened up the area where the hole developed.
Cowell admitted it was just pure misfortune for Hamilton that the failure occurred on his car when it did.
"It probably happened on the formation lap," he said. "He drew the unlucky card - and we had a DNF because of something as trivial as a rubber tube."
The discovery of the tube causing the failure explains why Hamilton has been able to continue using his Melbourne engine for this weekend - as it is working fine with the replacement tubes in place.