Arc grounding faults occur frequently in power supply and distribution system with effective grounding neutral point. Existing fault detection methods are insufficient when arc dissipation power is small and zero rest time is short, resulting in low detection accuracy. In order to solve this problem, this paper abandons the widely used characteristic identification schemes based on fault line signals, and the zero sequence current of the fault bypass is used to identify the fault. Firstly, for the arc grounding fault, the formation mechanism of zero sequence current of fault bypass is explored, and the transmission effect of arc fault characteristics to fault bypass signal is revealed. Then, the gradient product and correlation coefficient index are used to describe the zero sequence current signal characteristics of the fault bypass, and the identification criteria is established. Finally, Simulation results and experimental data verify the effectiveness of the proposed method, and the comparative analysis shows its advantages over the existing methods. The proposed method expands the arc fault identification method, and can be used to prevent electrical fires caused by arc faults.