In this paper, a new smart fault detection algorithm was proposed that was employed in the protection system of electrical power transmission systems. The proposed algorithm uses phasor measurement units (PMUs) located at the terminals of the transmission lines. The measurements from the PMUs are used to compute the rate of change of delta reactive power or RPCQ for each line. The value of RPCQ is used to detect the occurrence of faults and define the faulty line. The algorithm was tested using a bench mark testing system WSCC 9-bus system. The testing included different types faults including single line to ground, line to line, double line to ground and three phase faults at different locations. The results showed the robustness and reliability of the proposed algorithm in fault detection. The fault location was changed to be in different positions of the line, and the proposed scheme still succeeded in detecting the faulty line correctly. The main contributions of this paper is the proposal of the smart fault detection algorithm that succeeds in providing high confidence results while using simple procedures.