This paper proposes a new fault detection criterion logic that extracts the features of magnetizing inrush and internal faults by making use of Daubechies Wavelet Transform which analyzes distinct features. To prove the effectiveness of proposed method, the paper constructs power system model including power transformer by using EMTP, and collects data through simulation using various fault inception angle and magnetizing inrush. The conclusions implemented by the C program and the Wavemenu of MATLAB Toolbos are more effective and simpler to distinguish inter-turn faults from magnetizing inrush states.