In view of the insulation fault of transmission lines, passive maintenance and prevention are mostly adopted, which can not realize real-time monitoring and early warning. In this paper, the mechanism of pollution discharge and traveling wave generation is analyzed. The analysis results indicate that the insulation fault generates periodical traveling wave. The more serious insulation performance decreases, the greater amplitude and the shorter period of the traveling wave generated. According to the characteristic mentioned above, fuzzy theory is used to realize the early warning. The amplitude and time interval of the fault traveling wave are taken as the input, and the degree of fault warning is taken as the output. Moreover, the fuzzy relation is determined to establish the fuzzy rule base, so as to realize fuzzy early warning. The field test results show that the electric power line insulation fault early warning system has high identification sensitivity, which can predict the insulation performance of the line insulator accurately.