The invention discloses a relay utilizing fault transient state current component protection, comprising a modal hybrid circuit, a transient state filtering unit, a counter, a transient state time tracing unit, a transient state polarity detection unit, a multipath time and polarity comparison unit, a decision unit, a logic trapping unit, a first communication interface (6) and a second communication interface (7). An application method comprises the following steps: 1) supposing a fault occurred in Point F1; 2) generating high frequency signals by a fault phase and a non-fault phase; 3) sending data to an adjacent relay by a relay; 4) comparing the polarity and transient state time of a first wave with information recorded in other relays by each relay; 5) determining the tripping breaker, if a time difference of the transient state current reaching the two ends of an electricity transmission circuit is less than the ratio of the length of the electricity transmission circuit to the wave speed of the transient state current, and the polarities of the transient state current signals detected at the two ends of the electricity transmission circuit are the same; 6) determining the fault position by a time difference of a traveling wave reaching the two ends of the fault circuit; and 7) preventing the breaker from trapping by the relay, if the time difference of the transient state current reaching the two ends of the electricity transmission circuit is equal to the ratio of the length of the electricity transmission circuit to the wave speed of the transient state current andthe polarities of the transient state current signals detected at the two ends of the electricity transmission circuit are different. The invention has the advantages of high detection precision, quick response and low cost.