A new fault diagnosis method based on the variational mode decomposition and permutation entropy (VMDPE) is proposed to deal with the problem of the loss of signal feature and not reflecting the essential feature of the signal with the fault signal analysis methods of the transmission line of power system. Taking the transmission line of singlephase grounding fault as an example, the IEEE 14 nodes standard test system is selected. Taking the singlephase grounding fault current as the fault signal, each phase fault signal is firstly decomposed with VMD. And then, the decomposed fault signal is analyzed with PE. At last, according the total PE value of each phase fault signal, the transmission lines fault is identified, and the comparison with the wavelet transform and the PE is carried out. The results show that the proposed algorithm can effectively diagnose the fault of transmission line and be accurate and reliable for transmission line fault diagnosis.