In order to solve the problem that the fault line cannot be accurately identified after single-phase grounding fault occurs in power grid, an intelligent sensing method of residual current grounding fault based on wavelet packet decomposition is proposed. Based on wavelet analysis and intelligent sensing principle, the residual current generated by grounding fault is collected, and the collected residual current information is analyzed and compared to sense the grounding fault and identify the fault. Based on the research of on-line monitoring of residual current of AC power supply and arc grounding fault diagnosis technology based on wavelet transform, the time-frequency characteristics of current obtained by wavelet packet decomposition are used for fault line selection; then the difference of current characteristics between fault line and normal line is analyzed, and the fault line is accurately identified; finally, the fault line based on the proposed wavelet packet decomposition is analyzed in the simulation software The simulation results show that the method is effective, which provides a reference for the design of intelligent sensing system of AC power grounding fault.