[Objective] A large number of aging earth and rockfill dams in China needs to be heightened due to seepage risks and insufficient flood control capacity. This study aims to reveal the seepage patterns of heightened dams, quantitatively evaluate the effectiveness of anti-seepage systems, and investigate the effects of two typical defects—waterstop failure at peripheral joints and cracking in cutoff walls—on seepage safety. [Methods] With a reservoir heightening project under construction as a case study, a three-dimensional finite element seepage model was established, incorporating the old dam, heightened concrete-faced rockfill dam, concrete cutoff wall, and curtain grouting system. Based on actual geological conditions and material permeability parameters, the seepage field distribution under four operating conditions—normal water level, dead water level, design flood level, and check flood level—was simulated. Defect-induced seepage was also simulated by setting different waterstop failure widths to analyze the sensitivity of these defects to seepage discharge, hydraulic head distribution, and seepage gradient. [Results] Under normal operation, the combined action of the new impermeable system effectively controlled seepage flow in the heightened dam. The free surface of seepage in the dam body remained low, with most areas in a drained state, while seepage flow primarily concentrated in the foundation; the total seepage discharge was 22.05 L/s. The hydraulic gradients of the face slab, cutoff wall, and curtain grouting were all below allowable thresholds, indicating that the anti-seepage system is reliable. When local waterstop failure occurred at the peripheral joint, reservoir water flew into the dam body through failure areas, forming a “bulging” saturation zone in the total hydraulic head contours. As the failure width increased, this zone expanded, reflecting local concentrated seepage. When local cracking occurred at the base of the cutoff wall, seepage discharge through the foundation riverbed increased markedly. As the cracking width increased, the riverbed seepage discharge rose correspondingly. However, this local leakage at the base of the cutoff wall had minimal impact on the hydraulic head distribution in the dam body and posed no threat to overall seepage safety. [Conclusion] The findings provide a theoretical basis for optimizing seepage control design in rockfill-based earth dam heightening project and offer important guidance for advancing scientific and precise anti-seepage design in old reservoir heightening projects in China.