Based on the study on the properties of Magnetic Inrush Current and Fault Current of power transformers, Saber is applied to realize the simulation of such conditions as no-load closing and all the fault conditions including turn-to-turn fault and turn-to-earth fault. Grounded on the wavelet analysis theory, a new method is proposed which can differentiate effectively the internal and external faults and detect the turn-to-turn fault. The simulation result shows its effectiveness.