In modern power system whenever failures take place, it interrupts power supply and sometimes cause system outages. Lightning and switching over voltage are one of the reasons for power system failure. Over voltage due to natural lightning is most hazardous phenomenon which can cause severe damages which results in system outage. Natural lightning stroke when discharges through the system equipment, few thousands of Ampere current flows through the entire system. Hence, system voltage level increases extremely high above the system voltage. The power system must be capable to withstand and protected against such over voltages. There are many different protection schemes for lightning surges are adopted out of that surge arresters (SA) are most commonly used for protection against lightning surges. From different types of surge arresters, metal oxide surge arrester (MOSA) has best non-linear characteristics. In this paper, performance evaluation of MOSA on 765 kV single circuit line is taken into consideration. Effect of location of MOSA from power transformer terminal is analyzed with respect to location of lightning strikes. Also, effect on transmission line voltage and effect of tower footing resistance is also considered. Modeling of all line parameters and surge arrester and their simulation is done using EMTP-RV program and its results are discussed in detail.