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This study proposes a novel method using Jiles-Atherton model parameters to identify small fault current results from winding turn-to-turn short circuit in power transformer inrush current. The waveform symmetry and hysteresis curve shapes of inrush current with fault current are different from inrush current without fault current; that means the magnetic parameters of transformer cores and windings are influenced. Moreover, cycle leakage inductance and cycle winding resistance also can be used to distinguish inrush current and internal fault current due to changes of permeability and the winding current density caused by transformer core or winding state changes. Jiles-Atherton parameters per cycle, leakage inductance per cycle, and the winding resistance per cycle are estimated from the exciting inrush current per cycle under no-load conditions using the differential evolution algorithm. This study uses two types of parameters: the first is the correlation coefficient of Jiles-Atherton parameters of a transformer under no-load exciting condition. The second type is the variation trend of the cycle leakage inductance and the cycle winding resistance. The study uses cross validation of the two methods to distinguish whether inrush current contains small fault current. The experiment has verified the feasibility and accuracy of the proposed methods in this study.