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The paper presents a new approach based on wavelet and neural network for the estimation of harmonic components in the power system. This proposed method preprocesses the signal using wavelet analysis to get feature extraction of signals. Then it analyses and calculates the feature vector by the artificial neural network (ANN), and the harmonic components of the current can be got. The combination of wavelet and ANN make up for each other's deficiencies and it can solve the frequency aliasing effectively. The structure of this method and the specific algorithm are presented. The simulation model is also built and the results show that the harmonic components can be detected at real time with high precision.