This paper proposes a new two-terminal fault location method based on Stehfest algorithm. The method uses zero-sequence transient information within first half-cycle after a single-phase ground fault occurred in the distribution network, adopts Prony algorithm to obtain time domain expression of zero-sequence transient information, combines with zero sequence network and image function of distributed parameter line, takes frequency characteristics of lines’ zero sequence parameters into account and gets the image function location equation by using the fault feature. Then Stehfest algorithm is adopted to get location equation’s numerical inversion and search algorithm is used to find the minimum value of function location equation and obtain the numerical matrix. Last, the method calculates square sums of matrix row elements and takes the minimum value as the target to determine the fault distance. The accuracy and effectiveness of the method has been verified by EMTP-ATP simulation experiments.