The detection of the leakage current of the zinc oxide arrester is achieved by extracting the fundamental and harmonic parameters of the leakage current through harmonic analysis, and the operation of the device in the power grid can be judged according to the resistive component of the harmonic current. In order to solve the problem of digital signal processing performance degradation caused by data truncation during harmonic analysis by fast Fourier transform (FFT). All-phase FFT analysis method that considers all possible data truncation conditions of a sample point is selected, and then all-phase time-shift phase difference correction algorithm is selected based on this analysis method, and use the window spectrum function to derive a correction formula. Compared with the ratio correction algorithm based on FFT, the algorithm which is selected has improved the accuracy of harmonic analysis by 4 to 5 orders of magnitude in the case of no noise and 1 to 2 orders of magnitude in the case of noisy (50 dB), and the frequency estimation deviation for relatively small signals does not exceed 0. 6 Hz, and the phase estimation deviation does not exceed 0. 5°. This algorithm has phase invariance and better ability to suppress spectrum leakage and realizes the improvement of detection accuracy and the estimation of small signal harmonic parameters, which is verified in the leakage current detection system.