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To solve the fault problems of power grid distribution system and minimize disaster losses, power network system distribution model system based on IEC 61499 function blocks is established, and the concept of primary collaboration domain and secondary collaboration domain is proposed. Physical fault and logical fault of grid system are defined. Fault location method affected by wireless sensor and intelligent device is provided. The mechanism and algorithms of fault location, isolation and self-healing of grid system is discussed through instance. The text shows that the method can maximize restore power supply partly and further improve fault-resistant ability of grid system.