Analysis of the existing methods for fault line selection and the characteristics of zero-sequence transient current in small current grounding system, a novel fault line selection method based on grey relation analysis is proposed. The difference between fault line and normal lines is distinguished by the relation degree of the zero-sequence transient current of fault line and normal lines'. Besides, an improved algorithm is proposed to enlarge the difference. The simulation results using PSCAD show that the method proposed can be applied to any distribution system with different grounding patterns and has large difference between fault line and normal lines. So the method has high accuracy and high ability of anti-disturbance.