A correct and rapid inference is required for practical use of an online fault diagnosis in power substations. This paper proposes a novel approach for on-line fault section estimations and fault types identification using the hybrid cause-effect network/fuzzy rule-based method in distribution substations. A cause-effect network, which is well suited to parallel processing, represents the functions of protective relays and circuit breakers for selection of faulted sections. Therefore the inference speed can be improved significantly. In order to deal with the uncertainties involved in the process of clarifying faults, a fuzzy rule-based method is derived. The proposed approach has been practically verified by testing on a typical Taiwan Power Company's (Taipower) secondary substation. The experimental results reveal that the correct and rapid diagnosis is obtained even for the fault domains involving multiple faults and failure operations of protective devices. Moreover, it is easy to implement and transplant into different substations.