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A flood of alarm messages in an automatic digital substation makes the monitoring task a significant challenge for the operators in a remote control center, especially under fault scenarios. An online intelligent alarm-processing system is developed based on the architecture of the digital substation. First, real-time alarms are classified according to the IEC 61850 standard in order to provide synthesized and organized alarms for the alarm-processing procedure in the next step. Then, a new and systematic alarm-processing approach for digital substations is developed. Two modules (i.e., the generation of candidate hypotheses and the truth evaluation for the hypotheses) are included in the developed approach, and these two modules are operating in parallel in online implementation. This approach could not only determine the fault/disturbance cause but also the missing or false alarms as well as the causes of the false alarms. According to actual application requirements, an online intelligent alarm-processing system is developed and applied in the Xingguo substation-the first digital substation in Jiangxi Province, China. Finally, an actual alarm-processing scenario serves to demonstrate the presented alarm-processing method as well as the developed software system.