The invention discloses a generator terminal potential transformer inter-turn short circuit on-line identification method. The generator terminal potential transformer inter-turn short circuit on-line identification method includes the following steps that: main transformer high-voltage side zero sequence voltage, factory transformer low-voltage side zero sequence voltage and generator neutral point zero sequence voltage are measured, fundamental wave effective values of the main transformer high-voltage side zero sequence voltage, factory transformer low-voltage side zero sequence voltage and generator neutral point zero sequence voltage are calculated respectively; the value of insulation resistance against ground of a stator winding is calculated through utilizing an injection type stator grounding protection principle; and when the fundamental wave effective value of the generator neutral point zero sequence voltage is larger than a stator grounding protection action constant value, and the fundamental wave effective values of the main transformer high-voltage side zero sequence voltage and the factory transformer low-voltage side zero sequence voltage are both lower than the constant value, and the value of the insulation resistance against ground of the stator winding is not decreased, it judges that a generator terminal potential transformer inter-turn short circuit occurs, and warning is performed after time delay, and a fundamental wave zero sequence voltage stator grounding protection sensitive section is blocked. The generator terminal potential transformer inter-turn short circuit on-line identification method of the invention can accurately judge generator terminal potential transformer (PT) inter-turn short circuit faults, and therefore, misoperation of stator grounding protection when the short circuits occur can be effectively prevented, and troubleshooting time can be greatly reduced.