The harmonic measurement error mechanism and performance improvement method of the direct-current fiber-optic current transformer (DC FOCT) are investigated. The mathematical models in the discrete domain of the closed-loop signal-detecting system and the moving average output filter are established. The simulation analysis is carried out on the frequency response characteristic of the transformer. The study results show that the forward gain of the closed-loop detection system and the order of the output filter are both crucial factors affecting the harmonic current measurement accuracy. The harmonic current measurement error can be effectively decreased by increasing the forward gain under the condition of the stabilization of the closed-loop system and simultaneously by reducing the order of the output filter. The test platform for the harmonic current measurement error of the DC FOCT is built. The experimental results show that, in the range of 50-1200 Hz, the measurement error of the model machine is less than 0.5% and the bandwidth is more than 10 kHz.