Abstract: The contradiction between the expanding scale of urban distribution networks and the growing demand for highly reliable power supply has become increasingly prominent. Focusing on the technical practice of "multi-level coordination and precise self-healing", this paper proposes a fault-handling system that integrates optimized differential protection, intelligent switch numbering, and reconstructed self-healing strategies. By establishing a four- or five-level differential Control architecture, combined with the iterative application of time coordination and self-healing logic in spring-operated or permanent magnet-operated circuit breakers, the system achieves precise fault isolation and rapid power restoration in non-fault areas. This provides a replicable solution for improving the reliability of high-density urban distribution networks.