Liquid metal current limiter (LMCL) is regarded as a viable solution for reducing the fault current in the power grid, but demonstrating the liquid metal arc plasma self-pinching process of the resistive wall and reducing the erosion of LMCL are challenging not only theoretically but also practically. In this work, a novel LMCL is designed with a resistive wall that can be connected to the current-limiting circuit inside the cavity. Specifically, a novel fault current limiter (FCL) topology is put forward that the novel LMCL is combined with fast switch and current-limiting reactor. Further, the liquid metal self-pinch effect is modeled mathematically in three dimensions and the gas-liquid two-phase dynamic diagrams under different short-circuit currents are obtained by simulation. The simulation results indicate that with the increase of current, the time for the liquid metal-free surface begins depressing is dropped, and the position of the depression also changes. Different kinds of bubbles formed by the depressions gradually extend, squeeze, and break. With the increase of current, liquid metal takes less time to break. But the breaks still occur at the edge of the channel, forming arc plasma. Finally, relevant experiments are conducted for the novel FCL topology. The arcing process and current transfer process are particularly analyzed. Comparisons of peak arc voltage, arcing time, current limiting efficiency, and electrodes erosion are presented. The results demonstrate that arc voltage of the novel FCL topology is reduced by more than 4.5 times and the arcing time is reduced by more than 12%. The erosions of liquid metal and electrodes are reduced. Moreover, the current limiting efficiency of the novel FCL topology is improved by 1%‒5%. This work lays a foundation for the topology and optimal design of LMCL.