In view of problems existing in multi-terminal ultra-high voltage direct current(UHVDC) transmission line, such as wide fault range and easy malfunction of protection actions, a fault diagnosis method based on wavelet transform and transient current energy difference(TCED) is proposed. Firstly, the wavelet transform is used to analyze fault current, and a mother wavelet selection method based on Pearson product-moment correlation coefficient is proposed. Then, the fault direction is determined by characteristics of TCED between two sides of the fault. The fault area is determined by fault direction information of each converter station. Finally, PSCAD / EMTDC simulation model of four terminal UHVDC transmission line is established, and performance of the proposed method is demonstrated in terms of fault location, resistance and distance. The simulation results show that the proposed method can effectively distinguish the power system transient disturbance and DC fault, accurately determine the fault area of the line, sharply improve accuracy of determination and shorten detection time.