In this paper we propose a new generalization of the one-dimensional differential transform method that will extend the application of the method to differential equations of fractional order. The new generalization is based on generalized Taylor's formula and Caputo fractional derivative. Several illustrative examples are given to demonstrate the effectiveness of the obtained results. The new generalization introduces a promising tool for many linear and nonlinear models containing fractional derivatives. © 2007 Elsevier Inc. All rights reserved.