In this study, a phase fault detection algorithm is developed by employing the envelope detector method. The proposed method diagnoses faults among phases and defines fault areas in the incoming signal. The designed algorithm consists of three steps: analytical signal conversion, complex magnitude, and fault detection. Initially, an analytical signal is obtained from the incoming power signal to determine the instantaneous amplitude and phase of the signal. A complex magnitude operation is applied to analytical signals to display changes in amplitude. On the basis of the threshold values specified by the user, the last step identifies the distortion signal in terms of the type of error and size. The proposed method is tested with realistically simulated substation power signal data and real power system data from the Grid Event Signature Library. The obtained results revealed that the proposed method detects distortions accurately.