This paper presents a novel scheme to online measure the birefringence of the sensing fiber in all‐fiber optic current transformer (AFOCT) system, which monitors the current on direct current (DC) transmission lines using the Faraday magneto‐optic effect in sensing fibers. In this scheme, by purposefully varying the difference of square‐wave modulated phases via the phase modulator in the AFOCT system, different system transmittances can be obtained. On the basis of the relationship between the system transmittance and linear and circular birefringences, an online measurement scheme of both the linear and circular birefringences of the sensing fibers can be established. In this scheme, the AFOCT system is described by the transmission model based on the Jones matrices, with which the current on DC transmission lines can be measured from the phase shift caused by the Faraday effect. Then, under different square‐wave modulated phases, the system transmittance models are constructed with respect to the linear and circular birefringences of the sensing fiber. For a given sensing fiber with certain linear and circular birefringences, the specific system transmittances are determined and are the curves in space in the respective system transmittance models. Subsequently, these curves in space can be projected onto the coordinate plane composed of the linear and circular birefringence coordinate axes, where the intersection point of the projected plane curves gives the to‐be‐measured values of the linear and circular birefringences of the sensing fiber. The proposed scheme is validated by the preset linear and circular birefringences of the sensing fiber, with different linear birefringences of the polarization‐maintaining fiber. The measurement results show the values consistent with the preset ones.