In allusion to the problem of traditional zone III distance relays can’t identify the line overload and the line fault, this paper specifically analyses the electrical characteristics differences of the overload and the fault in current asymmetry degree、U_φφ cos?(φ_φφ 〖90〗^0-φ_line )<0.5U_NN and the change of phase, then a new method for identification of overload and fault is proposed. The method includes two parts: one of them is a method to distinguish phase-to-phase faults from Symmetrical overload, which is based on current asymmetry degree and U_φφ cos?(φ_φφ 〖90〗^0-φ_line )<0.5U_NN; the another of them is a method to distinguish single-phase earth fault from unsymmetrical overload, which is based on current asymmetry degree、U_φφ cos?(φ_φφ 〖90〗^0-φ_line )<0.5U_NNand ARG(U ?_φ/U ?_φφ) (φ=A,B,C). Through RTDS simulation, the results show that the method can prevent maloperation of zone III distance protection caused by overload effectively and unblock zone III distance protection when fault does happen.