Lightning strikes are a significant cause of transient, faults and outages in electric power transmission and distribution systems. To improve the accuracy and reliability of lightning stroke fault detection in a noisy environment, a locating method based on Kalman Filter Maximum Likelihood (KF-ML) is proposed. First, short-circuit faults and lightning faults are distinguished by comparing the difference of transient characteristics between their currents. The filter residual will show a sharp singularity when the traveling wave arrives. In addition, the lightning strike side and fault side can be determined by comparing the time when the initial traveling wave reaches both ends. In accordance with the two-terminal distance measurement method, the distance of the lightning strike point can be calculated. The fault distance can be obtained by calculating the time that the initial lightning wave reaches the fault side and the time of the reflected wave from the fault point. The simulation analysis of the simulated lightning current shows that this method can effectively detect the traveling wave head and apply it to the lightning strike location and fault location test under different conditions, and the sensitivity is high. This work is supported by National Natural Science Foundation of China (No. 51507015 and No. 61673388) and Natural Science Foundation of Hunan Province (No. 2018JJ2439).