The grounding transformer is widely used in large and medium-sized substations in China since it has the dual functions of system neutral point extraction and station power consumption. Its operational reliability directly affects the safety and stability of the power grid. There is a problem of the lack of a detection method for an inter-turn insulation short-circuit fault of the low-voltage winding of a grounding transformer. Thus this paper builds a two-dimensional finite element model of the grounding transformer based on the magnetic field-circuit coupling principle and by use of ANSYS software. The correctness of the model is verified by comparing the simulated and calculated values of the high and low side currents. The electromagnetic characteristics of its low-voltage winding single-turn inter-turn short-circuit fault are analyzed. Research indicates that when a single-turn inter-turn short circuit fault occurs in the low-voltage winding of a grounding transformer, there is a large short-circuit current inside the short-circuit ring; the voltage, current phase angle, power factor angle, and three-phase currents on the high and low voltage sides change, but the current fluctuation cannot reach the action setting value of the grounding transformer protection; at the same time, the magnetic field near the short-circuit ring is distorted. This work is supported by the National “13th Five-Year Plan” Key Research and Development Program of China (No. 2016YFB0901303).