Peatland wildfires in Southeast Asia have emerged as a major environmental and geophysical challenge due to their persistent smoldering behavior and large carbon emissions. This review integrates soil heat–moisture transport theory with wildfire observations to explain peat fire ignition, persistence, and spread, emphasizing the Philip–de Vries framework for coupled heat–water flow. We examine how soil moisture content and thermal properties modulate fire ignition and smouldering propagation, leading to persistent underground combustion. Observational evidence is presented on wildfire frequency, severity, and distribution in Southeast Asia’s peatlands, including satellite-based fire records and peat extent maps. Some modeling studies in the past are reviewed to elucidate how droughts, elevated temperatures, and land-use changes (e.g. drainage) drive regional fire regimes. Evidence across experimental, observational, and modeling studies shows that peat fires are strongly linked to soil drying and heat accumulation, often exacerbated by El Niño-induced drought and climate warming. The review clarifies the coupled mechanisms governing ignition, sustained smoldering, and the persistence of underground fires. The synthesis highlights the need to incorporate coupled hydro-thermal soil processes into fire-risk prediction and peatland management frameworks. Improved understanding of soil heat–moisture dynamics provides a physics-based basis for early warning, restoration, and long-term wildfire mitigation in tropical peatlands.