When power system is under dynamic condition such as power oscillation, the fault voltage and current cannot be expressed as a standard sinusoidal function, so error, in the form of oscillation of estimate, will arise as conventional fault location algorithms ignore the dynamic characteristics of supplied signals. A novel algorithm extended from conventional fault location algorithms is proposed in this study. This approach not only can express the spatial characteristic of supplied signals but also considers them as time-variant signals whose magnitude and frequency are changing against time. Therefore it possesses the ability of describing spatial property and time property of signals, simultaneously. By using the adjoining phasor estimate from synchrophasor phasor measurement units (PMUs) to express the dynamic characteristics in terms of derivatives, an accurate estimate of fault location can be attained via Newton iteration method. The performance of the proposed algorithm is evaluated by computer Power System Computer Aided Design/Electromagnetic Transient including DC (PSCAD/EMTDC)-generated signals under various situations. The evaluation results indicate that the proposed technique yields an accurate fault location estimate under dynamic conditions independent of fault types, fault impedance and fault locations. The maximal estimate error of the proposed algorithm is less than one-tenth of that of the conventional fault location algorithm in most cases.