In order to solve the fault location problem in the small-current grounding system, a distribution network fault location method that utilizes the IEC61850 to exchange device information and compare the fault characteristic waveforms is proposed. Different from the traditional method based on the difference discrimination between the upstream and downstream low frequency waveforms, this paper extracts the characteristic frequency range of the distribution network by analyzing the transient characteristics of small-current grounding fault. On this basis, the improved EMD algorithm is put forward and the characteristic zero-module currents which can effectively filter the high frequency interference are achieved. Thus the faults are able to be located by comparing the similarity and amplitude difference degree of the characteristic zero-module currents of different sections. With the application of the method above and the IEC61850, the realization of fault location proposed merely needs to excahnge device information, which significantly reduces the communication pressure of master station and improves the location efficiency. The simulation of the small-current grounding fault in distribution network based on Matlab/Simulink proves that the location method in this paper is capable of dealing with the multiple access of distribution power and multiple faults. Moreover, the dynamic simulation of designed power distribution device further indicates that the method is more accurate and practical. This work is supported by Key Fund of Smart Grid Technique and Equipment of National Key Basic Research and Development Program of China (No. 2016YFB0900600).