This paper presents an online technique to detect and isolate the interturn fault in the inductors of the LCL filter integrated with the active front-end rectifier used for electric propulsion of marine vessels. The proposed online technique is based on the fundamental component of the core-leakage flux measured at the yoke center of the inductor. A comparative study of the grid currents and the core-leakage fluxes under interturn faults is carried out using the proposed analytical models which reveal high sensitivity of the core-leakage flux at the yoke center when compared to the grid currents. The theoretical analysis is validated experimentally on a laboratory-based 11.3-kW marine propulsion system test rig for 1-turn, 2-turn, and 4-turn faults under various loading and supply voltage unbalance conditions. An online fault notification and isolation framework has also been proposed and validated experimentally with two different techniques to increase the reliability for 1-turn fault detection. The methodology requires just a single, low-bandwidth, and inexpensive magnetic flux sensor in addition to the existing current sensors to detect as low as 1-turn fault out of 63 turns.