Choosing to build a three-level digital substation based on IEC 61850 in the East China 500 kV grid much more difficult than existing digital substations is of great significance. The 500 kV Lanxi substation is taken as an example. Except for the transformers that still adopt the hardware contact， the intelligent operation device is laid at the switchyard for the breaker to go intelligent， with the IEC 61850-based network used for the association between one protection and another， the protective， monitoring and control devices and switching， the protective， monitoring and control devices and the monitoring console， and the fault information system as well as the switch lock between monitoring and control devices. The digital substation construction scheme， engineering application model， network mode and the configuration of relay are discussed.