Current Transformer (CT) saturation may cause the maloperation or operating time delay of protective relays. In this paper, a CT saturation detection algorithm based on wavelet transformation is suggested. The WT (Wavelet Transformation) can be easily implemented with the multilevel filter banks. Daubechies 2 is used as the mother wavelet in the proposed algorithm. A second order Butterworth high-pass filter is used to extract the fine peak feature from the output signal of the filter banks. A series of test results show that the proposed algorithm detects the saturated region accurately under various faults and CT conditions of a C800 CT model.