• Using a high-frequency based method, a very fast protection algorithm is provided. • Teager energy operator is a very fast and simple method for the extraction of high-frequency components of the signal. • A very simple index is proposed here which makes the internal fault identification really fast. • A very simple and fast method is provided for the fault type classification. • The algorithm is successfully tested by the experimental signals. Transformers are one of the most important tools of a power system. Differential protection relays with the second harmonic restraint criterion are traditionally used for the transformer protection. This conventional criterion may fail to perform properly in some cases which results in the incorrect relay operation. A novel high-frequency-based algorithm is proposed in this paper to discriminate between the magnetizing inrush currents and the internal faults. Teager energy operator (TEO) is used here to extract high-frequency information from the differential current signals. Differential currents resulted from an internal fault have more high-frequency transients than those resulted from a magnetizing inrush and this is the basic principle used in the proposed algorithm. A very simple and effective operator is proposed in this paper to quantify the overall high-frequency transients of a signal. The proposed algorithm uses a quarter of a cycle of the differential currents along with the very simple mathematical operators to do its task. Therefore, this is a very fast and simple algorithm. The algorithm is tested by the simulated and experimental test signals. Results show the robustness and reliability of the proposed algorithm.