Distribution transformers with different ratings are one of the significant components in power systems. However, the high drawback of conventional transformers is the temperature instability under various faults. To overcome this problem, a new generation of transformers, called high−temperature superconducting (HTS) transformers, has been introduced in recent decades. These transformers use windings with closed to zero resistance that are immersed in the liquid nitrogen (LN2). In the same rating of power, the losses, volume, and weight of the HTS transformer when compared to conventional one are very low. In this paper, a 20 kV/0.4 kV, 630 kVA HTS distribution transformer with Bi–2223/Ag coils is considered. In following, under unbalanced load condition that is modeled with a short–circuit fault, the electromagnetic and thermal performances of a transformer are assessed using the finite element method (FEM). In electromagnetic analysis, the AC loss and Lorentz forces of HTS coils are analyzed for normal and abnormal conditions. Besides, the thermal analysis is done to study the increasing temperature of HTS coils under short–circuit faults. The results show the good reliability of HTS coils due to not exceeding the critical temperature.