In view of large power transformer, a novel composite criterion of transformer protection based on power frequency variation is proposed in this paper. The new scheme makes full use of the advantages that microprocessor-based protection can extract power frequency variation easily. According to the different phase characteristics of fault current and different polarity of the power frequency current(voltage) absolute value variation at both sides of the transformer with internal and external faults, the new scheme can discriminate external fault from internal one quickly by doing logic AND operation to power frequency current variation at both sides of transformer. And comparing the characteristics of leaping change of the power frequency current(voltage) absolute value variation at both sides of the transformer to distinguish fault from magnetizing inrush. With the presumption of no external faults, it can also identify the internal fault and the magnetizing inrush which caused by the clearance of an external fault through using the method proposed above synthetically. This paper analyzes the fault characteristic with different types of transformer faults for double or single power supply in detail. And the corresponding criterion is given in this paper. The new criterion does not use differential current as trip condition and has high sensitivity and reliability. Lot of PSCAD/EMTDC simulations and dynamic simulation experiments have proved the feasibility of the new criterion of transformer protection.