The reliability of transformer differential relays is enhanced by providing a method and apparatus which enable improved discrimination between transformer current differentials due to transformer inrush current and current differentials due the occurrence of an internal fault. This improvement in discrimination is provided by generating a first signal representative of currents flowing in at least two windings of the transformer, a second signal representative of a positive portion of the first signal, and a third signal representative of a negative portions of the first signal. A first output signal is generated when the magnitude of the second signal exceeds a first predetermined value, and a second output signal is generated when the magnitude of the third signal exceeds a second predetermined value. A trip signal is generated upon coincidence of the first and second output signals. Additional operate energy is generated when the magnitude of the absolute value of a vector sum operate signal, representative of the vector sum of currents flowing in at least two windings of the transformer, exceeds a first predetermined magnitude. The additional operate energy is terminated and additional restraint energy is generated when the magnitude of a percentage restraint signal, representative of the absolute values of currents flowing in a least two windings of the transformer, exceeds a second predetermined magnitude for a predetermined period of time.