Abstract: Starting from the basic theory of fluctuation method, this paper studied probability characteristics of the ratio of harmonic voltage fluctuation to harmonic current fluctuation. Through theoretical analysis, it was proved that the probability density of both real and imaginary part of the ratio follow the generalized Cauchy distribution if the harmonic source is affected by many random factors. So the Pearson VII formula was selected to describe the above distributions. An approach and its specific steps of using probability statistics and nonlinear curve-fitting were proposed to be used for estimation of power system harmonic impedances. Furthermore, this paper analyzed the factors affecting the estimated error of fluctuation method, and then gave out a set of error formulas and measured to reduce the error. Compared with the methods depending on data filtering strategies, the probability approach is more simple and convenient in data processing. And it has more advantages such as universality, reliability and noise immunity. Meanwhile, it can reduce failure rate of data processing by considering the probability characteristics in a wide perspective. Monte Carlo simulation and field test data analysis show that the proposed approach is practical and effective.