The extensive application of autotransformers in 500 kV power system leads to excessive fault currents when a grounded fault occurs on the medium-voltage bus. By installing a neutral grounding reactor (NGR) between the transformer neutral and the system ground, the short-circuit current can be restricted to a safe range. However, the selection of the optimal NGR value is particularly important. To address this, an actual 500 kV substation is modeled using PSCAD software. Based on the model, the effect of different NGR values on restricting short-circuit current is analyzed. The results show that the NGR has a good limiting effect on short-circuit current. However, the effect tends to saturate once the NGR value reaches a certain threshold. An appropriate NGR value can be preliminarily determined according to this trend. Finally, the overvoltage at the neutral point of the autotransformer with the application of NGR was verified to be within the specified range through the cases of no-load transformer energization and no-load transmission line energization.