An ungrounded receptacle can be replaced by a ground fault circuit interrupter installed:

A ground fault circuit interrupter (GFCI) is designed to protect against electrical shock by interrupting the circuit when it detects a fault or leakage current, regardless of whether the receptacle it protects is grounded. Installing a GFCI upstream from an ungrounded receptacle means placing it in such a way that it will monitor the entire branch circuit, including the receptacle in question.

By being upstream, the GFCI can effectively cut off power to the receptacle if it detects any ground faults, thus providing a level of safety even in the absence of an effective ground. This installation method is crucial because it allows for the protection of users who may use the receptacle, significantly reducing the risk of electrical shock.

Other potential installation locations, such as downstream or on the same phase, do not provide the same level of reliability for protecting ungrounded receptacles, as these options might not adequately safeguard the entire circuit against ground faults. Therefore, placing the GFCI upstream ensures maximum safety and effective operation while dealing with ungrounded receptacles.