A new method for distinguishing inrush current from the fault current of transformer is discussed. The method is based on the virtual differential current with characteristics such as: waveform harmonics， waveform discontinuous， wave spire and high slope of rising and back edge of waveform. Integrating waveform harmonics criterion with discontinuous waveform criterion， inrush current braked is implemented with phase. The correctness and effectiveness of the method are proved by the simulation， experiment， playback of field recording data and long-standing field running. The algorithm proposed can ensure the protection device locking reliably when transformers are energized， while acting quickly when transformers are energized accompanied with fault.