In this paper, the application of embedded system based on ARM9 and mC/OS-Ⅱ in DC system grounding fault detection is introduced. For the influence of the big grounding capacitance and ring net in DC system grounding fault detection with the method of low frequency injection, wavelet analysis is used to extract the characteristic of signal. The current signal of branch is analyzed and processed by selecting the suitable wavelet function on the basis of the principle of wavelet denoising. The simulation result shows that the method can overcome the influence of the capacitance and find the fault branch accurately. The former DC grounding fault detecting devices were mostly designed based on SCM, which limited the using of advanced algorithm. This paper introduces ARM embedded system into the field of DC system grounding fault detection, which makes it improved that the recent fault detection system can not implement advanced algorithm.