Abstract: To solve the problem that the the traditional failure differential protection based on fault-component currents may block due to commutation failure and fault resistance in AC/DC hybrid system, a new differential protection scheme based on fault-component currents is proposed. First, the reasons that the traditional differential protection based on fault-component currents failing to operate under the unsymmetrical earth fault are analyzed. Based on this, the cosine value of zero-sequence-current phase difference at both ends of the transmission line is used to compensate the differential current amplitude in traditional differential protection, so that the internal and external faults can be identified accurately. The phase selection function considering the differential current amplitude difference between fault and healthy phases is constructed to discriminate the fault phase. Therein, the fault type identification criterion using the total sum of half-cycle sampling values of zero-sequence current at both ends of a line is constructed to ensure that the proposed protection scheme only works during unsymmetrical earth faults. Finally, the simulation model of a ±800 kV DC/500 kV AC hybrid system is built in PSCAD/EMTDC to verify the proposed scheme. The results show that the protection scheme is not affected by DC commutation failure and fault resistance, and can protect the entire line reliably.