Inter-laminar short-circuit faults between the laminations of electrical machines, and other magnetic devices, have been one of the major challenges for the suppliers and customers of electrical steels. Extra power losses caused by inter-laminar faults depend on many factors including the location of the fault points. In this study, fundamental definitions and concepts of inter-laminar short-circuit faults, effect of inter-laminar faults on configuration of the magnetic cores and FEM verification are presented. Experimental works were performed to study the effect of inter-laminar faults with different configurations on the total power loss to distinguish and locate the critical and destructive faults. In the relevant studies, artificial short circuits of different configurations were applied between laminations of packs of four Epstein size laminations of 3% grain oriented silicon steel. Extra power losses caused by the inter-laminar faults were measured and the results were analysed.