In distribution 6–10 kV networks with an insulated neutral for earth fault protection, zero sequence current directional protection devices are commonly used. According to the operation data, the main disadvantage of such kind of protection is the possibility of their functioning failures in transient conditions with the most dangerous for network intermittent arc earth faults. It is known that most earth faults in 6–10 kV networks, primarily in the initial stage of insulation damage, have an intermittent arc. Operation failures of zero sequence current directional protection in case of arc faults reduce the operational reliability of the protected network and, as a result, the reliability of power supply to consumers. Nowadays, new developments of electrical power systems relay protection devices, including earth fault protection of medium voltage distribution electrical networks, are implemented only on a microprocessor base. Therefore, the selection and justification of the implementation principles of zero sequence current directional protection which can provide high dynamic stability of functioning is a relevant objective. When analyzing the dynamic stability of the functioning of zero sequence directional current protection, regarding the complexity of transients during intermittent arc earth faults in medium voltage electrical networks with an isolated neutral, the simulation in Matlab using SimPowerSystem and Simulink was carried out. This study focuses on transient currents and voltages as the main factor influencing dynamic stability of the functioning of zero sequence current directional protection. The impact of other factors, for example, the inaccuracies of the primary zero sequence current and voltage transducers, the scheme of formation of compared quantities, etc. was not taken into account in simulation models. The study has allowed determining the causes of possible functioning failures of digital current earth fault directional protection in dynamic operation modes. It has been shown that the usage of orthogonal components of fundamental frequency of zero sequence voltage and current in current directional protection devices eliminates the failure of their operation with any kind of arc earth faults. To ensure high dynamic stability of operation under the influence of transients during arc intermittent earth faults, current directional protection for this type of damage should be performed on the basis of monitoring the phase relationships of the fundamental frequency components of 50 Hz of zero sequence voltage and current, but not their full values.