A new method to distinguish inrush current from fault current based on waveform characteristics of differential current is proposed. The common characteristic of inrush currents is that they are all influenced by core saturation. Differential current is the real magnetizing current so that it shows this character more obviously. Waveform coefficient is defined as the percentage of current corresponding to flux unsaturated area in one cycle. If this coefficient is bigger than set value, it would be judged as inrush current. Otherwise an auxiliary criteria of whether waveform is completely located on one side of time axis is introduced to make a further judgment, which makes this method more reliable. The proposed method is verified by digital simulation experiments of no-load closing. The results show that inrush currents in various situations, and the performance of the method is superior to the second harmonic restraint principle and the dead angle principle.