This paper presents a stator ground protection scheme based on the fault current flowing in the breakdown channel. It trips only if the fault current exceeds the fault current tolerance capacity of the generator. Otherwise, it will just emit alarm signals. Thereby, the unnecessary trip-out of large generator can be avoided. The stability of the power system and the generator security can then be ensured. To achieve the scheme, methods of calculating the fault current in real time are proposed for three common generator neutral grounding methods based on the zero-sequence equivalent circuits. In addition, a ground fault location algorithm is presented which can automatically identify the faulted coil in a large generator with multicircuit stator winding. It greatly reduces the workload of repair. An implementation scheme is given on the basis of the subharmonic injection protection device. Simulation results show the validity of the protection scheme and the accuracy of the fault location algorithm.