The traction power return grounding fault of suspended monorail in station will lead to large-scale tripping of circuit breakers of other trains and adjacent traction substations. In order to avoid the impact on other normal equipment, and help maintenance personnel locking the fault area quickly and accurately, improvements were made by canceling the grounding overvoltage relay on the train and increasing the differential current detection device of the on-board equipment. Meanwhile, a hierarchical grounding detection and protection mechanism was proposed for the protection and fast positioning of traction power return grounding fault. The improved grounding protection device has been used on the test line, and the verification results shows that the protection mechanism could reduce the impact of the fault and improve the efficiency of train operation.