The instability of single-phase grounding faults makes it difficult to track the fault development process accurately. In this paper, a transition conductance tracking method for single-phase grounding fault identification is established to perceive the health state of the distribution network. To solve the situation that the insulation parameters of the neutral ungrounded system are difficult to obtain, a phase-shift method is proposed to measure the insulation parameters accurately. Based on the measurement results of insulation parameters, a transition conductance tracking model is constructed to monitor the changes of transition conductance in real time. Since the transition conductance varies steadily, it can be used as an important parameter to evaluate the development of a single-phase grounding fault. The innovative tracking method is verified by the simulation model, and the error analysis shows that the tracking error of transition conductance is less than 9%. The simulation results demonstrate that the proposed method can track the development of grounding faults effectively and give a quick warning to the operator. The fault identification theory adopted in this paper is not limited by the neutral grounding mode and especially can be applied to situations where the neutral point parameters are not adjusted.