When using the rough set theory for power system fault diagnosis the reduction process of the decision table is the key. The paper presents the decision table of the rough set theory, takes the signals of protection relays and circuit breakers of all kinds of fault cases as condition attributes and makes fault sections as value attributes to build the decision table. Considering the highly efficient of the niche genetic algorithm for the optimization of multi-peak functions, a algorithm based on niche genetic algorithm is proposed to obtain more optimal reductions of the rough sets and then to extract diagnosis rules. The simulation result shows that the validity and feasibility of the proposed algorithm.