In view of the low efficiency of image segmentation caused by manual initialization of traditional Grabcut algorithm, a new Grabcut automatic algorithm for composite insulator segmentation is proposed based on Otsu method. First, the original image is transformed into HSV space and weighted grayscale. Secondly, the V-channel image and the grayed image are segmented by Otsu and fused by logic to determine the target insulator area, and the initialization of Grabcut frame is completed by combining the position coordinates of the largest pass domain positioning insulator, so as to realize the automation of Grabcut. Finally, in view of the low accuracy of insulator broken string identification, a new area discrimination method is proposed to diagnose and locate the fault location by adding frame, filling and removing the original picture of the smallest external rectangle of the insulator segmentation image. The experimental results show that the Grabcut automatic algorithm can segment the target insulator well, and the segmentation accuracy can reach more than 96.6%. The detection rate of the proposed area discrimination method can reach more than 96.6% for the insulator with broken string fault and less than 6.7% for no fault. This work is supported by the Natural Science Foundation of Heilongjiang Province (No. LH2019E016).