This paper analyzes the operation characteristics of a self excited induction generator with Steinmetz connection. For this analysis, the symmetrical components analysis is used to obtain the related expressions and the excitation capacitance and the magnetizing reactance are determined in turn by the condition of self excitation which includes the input impedance of the generator as viewed across load terminals. Two simultaneous equations of the condition of self excitation itself are solved by using the real and imaginary function in an application software. This method is applied to simulate the operation characteristics when the generator is driven at rated speed and the specified excitation capacitor is connected across the lagging phase. The results show that better operation characteristics except generated frequency are obtained by using relatively large excitation capacitance and resistive load.