The excessive fault current induced by stator single-phase earth fault and big ground capacitance of stator winding of large generator can be restricted by neutral grounding through distribution transformer. This paper introduces a configuration method of generator neutral grounding device with high impedance distribution transformer. The fault capacitive current is partly compensated by the inductive current generated from the internal reactance of the transformer, and the ground-fault current is limited within an allowable range while the fault transient overvoltage is restrained.