It is difficult to measure the circulating current in delta windings of Y，d connected transformer. So the current phase compensation has to be considered for transformer differential protection. In this study， a proportional relationship between the zero sequence current in Y winding and circulating current in delta winding is derived based on the differential equations of transformer. If phase A is closed exactly in 90° by controlled switching， the part of the line current of phase A is almost equal to the circulating current. By using the correlative formula， the correlative coefficient of line current of phase A and zero sequence current in Y side is calculated so as to distinguish parts of line current， with and without influence of inrush. Then the ratio between the zero sequence current and the circulating current， and the circulating current can be calculated as well. Finally the algorithm is verified with MATLAB and RTDS simulation. The results show that the calculated circulating current is identical with the actual one accurately， and it offers a new algorithm method for the differential protection and the equivalent transient inductance.