This paper proposes a time-domain total harmonic distortion (THD) estimation technique for smart power meters with significant reduction of calculation steps and high accuracy. In addition, the potential advantage of the proposed THD estimation technique is that the active and reactive power components obtained during the calculation can be further used for other functions of smart power meter. Due to the above desirable characteristics, the proposed THD estimation technique requires less data storages and associated cost, and also has better reliability for real-time implementation. The proposed THD estimation technique is deduced based on instantaneous power theory and trigonometric relations. To better explain the proposed technique, a control block and the corresponding mathematical verifications are also given. Finally, to prove the advantages of the proposed method, simulation and experimental results are given in comparison with the traditional fast Fourier transform (FFT) method.