The word “Protection” is used to describe the whole concept of protecting a power system. Transformer protection is the vital significance to provide reliable operation of power system. The main challenge in transformer protection is to find a fast and efficient differential relay algorithm that isolates the transformer from the system causing least damage. Digital differential protection is a developed idea of the old system of conventional differential protection, which had made perfect solution to the problems that the old system suffer. In this paper, differential protection using relay is presented. MATLAB/SIMULINK platform were used to analyze differential protection relay for a large power transformer.