Based on the different variation characteristics of the ratio of differential current and restraint current during internal fault and external fault with current transformer saturation， a new saturation criterion called ratio restraint coefficient method is presented. Meanwhile a criterion of identifying the change of the differential current's polarity is added to solve the problem of opening the differential protection during the internal fault with current transformer saturation. The simulation results using EMTP clearly indicate that the proposed method can not only accurately identify the internal fault and external fault with current transformer saturation， but also open the differential protection quickly during the internal fault with current transformer saturation and even the transitional fault. The proposed method with clear characteristics and simple principle is a promising current transformer saturation criterion in field application.