The steady-state current of the power system contains the fundamental component and harmonics. Measuring steady-state current and improving the signal-to-noise ratio(SNR) is an important part of signal processing for optical current transducer (OCT). This paper introduces the principle and noise characteristics of OCT which is based on the Faraday magneto-optic effect. According to the low SNR and the demand of harmonic measurement for the power system, This paper proposes a time-domain method of harmonics measurement based on linear Kalman filter combined with phase-locked loop. A appropriate measuring model is established in order to meet the demand of measured current is mixed current with fundamental signal, harmonics and white noise. The simulation results done on LabVIEW show that this method can not only measure harmonics but also improve the SNR and the measurement accuracy.