With the development of electronic transformers and the extensive utilization of the international standard IEC 61850， the sampled values technology in IED in the substation bay layer will be developed from A/D conversion of analog signals to Ethernet communication technology. In order to apply the traditional algorithms in IED in the substation automation system， the linear Lagrange interpolation algorithm for sampled values from the merging unit is studied. The error and the effect of the harmonic signal on the interpolation algorithm are analyzed. Finally， the application and test results of the novel digitalized measuring and control device using the linear Lagrange interpolation algorithm are briefly described. The accuracy is satisfactory.