This paper deals with an improved fault location algorithm with compensation ground capacitance through distributed parameter for a long parallel T/L. For the purpose of fault locating algorithm non-influenced by source impedance and fault resistance, the loop method was used in the system modeling analysis. This algorithm uses a positive and negative sequence of the fault current for high accuracy of fault locating calculation. Power system model of 160km and 300km long parallel T/L was simulated using EMTP software. To evaluate of the proposed algorithm, we used the several different cases 64 sampled data per cycle. The test results show that the proposed algorithm was minimized the error factor and speed of fault location estimation.