To improve the performance of fault processing in distribution networks, the tasks of fault processing are summarized. Some problems, such as relay protection for distribution systems, improvement of local intelligence feeder automation and single phase grounding fault processing, are deeply investigated. It is pointed out that there is no need for perfection of relay protection for distribution systems and that a relay protection may be installed as long as it being effective. An improved local intelligence feeder automation based on over-current protection during closing period is put forward, the instance of which, showing that not only is the fault processing time reduced remarkably, but also the setting may be fixed. The structure and principle of a smart grounding distribution system is described. The realization of some key technologies, such as electromagnetic transient suppression, modification for phase-selection mistake, location and isolation of single phase grounding faults, are discussed in detail. This work is supported by Science and Technology Project of State Grid Corporation of China (No. 5226SX1600U9).