This paper proposes a new protection scheme for transmission lines equipped with UPFC based on the synchronized phasor measurements at both ends of the line. The fault detection and location indices based on sequence components are derived and used to discriminate the internal and external fault events accurately. The time for identifying an internal fault is well below 1/2 cycle. The performance of the detection/location indices is very good regardless of the compensated or uncompensated line configuration. The proposed protection system responds well and fast with regard to dependability and security. Moreover, the proposed scheme can protect full line length, in contrast to conventional distance relay, and is not affected by power system variations caused by UPFC during a fault. Such a capability can cope with the problem of overreaching and underreaching of the protected zone of the distance relay in the presence of UPFC.