Recently customers who have sensitive industrial loads have been installing co-generation facilities. They can avoid voltage sags and other distribution system related disturbances by supplying electricity to important load from their generators. For another example, FRIENDS, highly reliable distribution system using semiconductor switches or storage devices based on power electronics technology, is proposed. These examples illustrate that the need for high reliability in distribution system is increasing. In order to realize these systems, fast relaying algorithms are indispensable. The authors propose the necessity of protection devices that have the ability of processing fast relaying algorithms for distribution system. In designing fast protection systems, fast discrimination of magnetizing inrush current is also indispensable. Conventional method of inrush current detection for transformer protection utilizes the amount of second harmonic component of differential current. The author proposes a new method of detecting magnetizing inrush current using discrete wavelet transform. Fig. 1 shows the results of wavelet of inrush current. The upper figure shows a waveform of inrush current and the three figures below indicate wavelet components of level 1, 2 and 3. Wavelet Fig. 1. Wavelet components of inrush current and short-circuit fault current transform provides the function of detecting discontinuity of current waveform. accoding to state transition between non-saturation and saturation of transformer core. The proposed method detects spikes of the wavelet component of level 3 derived from the discontinuity of the current waveform at both the beginning and the end of inrush current. In spike detection algorithm, wavelet thresholding, one of the wavelet-based statistical modeling, was applied to estimate detection function of inrush current. Parameters of detection function, such as standard variation of the wavelet component was determined considering a distribution of wavelet component. The proposed method is verified using experimental data using sigle-phase transformer. The result of the spike detection using a moving window is shown in Fig. 2. In this figure, the result of spike detection is plotted together with original current waveform of each inrush and short-circuit fault. In the proposed method, inrush current is discriminated when the 2nd spike of wavelet component or level 3 disappeared. In this case, inrush current can be discriminated at 11.6 ms after inrush current began to flow. This simulation shows that the propsed method can can detect inrush current in less than 1 cycle and was proved to be effective. Fig. 2. Results of inrush current descrimination by spike detection-1