In order to solve problems that it is hard to confirm fault position when single-phase grounding fault happens in underground power supply system and existing off-line distance measured methods are poor in precision, the paper analyzed characteristics of single-phase grounding fault of underground power supply system with cable and proposed a method of on-line fault line selection and location of underground cable. The method uses polarity of transient zero-sequence reactive power in frequency band of line selection to select fault line when single-phase grounding fault happens in power supply system, and takes zero-sequence voltage of system's bus and zero-sequence current of lines at faulting time as input samples to train wavelet neural network based on characteristics that transient signals with high frequency of some frequency bands map fault distance, so as to realize fault location. The Simulink simulation result verified validity and accuracy of the methods.