The arc-fault occurring in the customer system becomes the direct cause of electric fire. However, it is very difficult to identify the arc-fault using the existing fault detection mechanism because the magnitude of the fault current is very small. Accordingly, this paper analyzes the causes of arc fault and designs the basic detection mechanism of arc fault. And then, it proposes an signal processing-based arc-fault determination methodology which can enhance the of accuracy of the arc-fault determination by applying DFT/DWT to the voltage and current waveform. Finally, this paper showed the application methodology of the proposed signal processing based fault determination method by applying and analyzing DFT/DWT to an high voltage in-rush current waveform.