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This paper introduces a new analysis method for early detection and prevention of power system cascading events. It uses the vulnerability index (VI) and margin index (MI) to evaluate the vulnerability and security of the individual system parts, as well as the whole system during an operating state. It identifies the vulnerable parts of the power system using the topology processing and operation index methods. For a given disturbance, it calculates the power flow, evaluates the vulnerability and security, identifies the vulnerable part, finds the transmission line overload and bus voltage problems, and predicts the possible successive events. The approach defines the control means using the following methods for early detection and prevention of cascading events: network contribution factor (NCF), generator distribution factor (GDF), load distribution factor (LDF), and selected minimum load shedding (SMLS). This approach has been tested using the IEEE RTS-96 24-bus system and promising results have been obtained. The proposed approach allows the power system operator to detect initial stages of cascading events and assert actions that will prevent such events from unfolding.