The most important element of power system can be said is the power transformer. This important as well as essential element should have a continuous monitoring and also effective protection. For the protection of the power transformer number of methods are present. One of the common method is the differential logic as it can easily distinguish between normal operation and internal fault conditions. Some operating conditions of the power transformer have a significant effect on differential logic operation which also have effect on the stability of power system. The algorithm has been proposed to enhance the performance of protection used power transformer by using dq0 transformation and fuzzy system. MATLAB software was used to model a power system and to test the algorithm. <br>