Distribution system is considered as one of the leading part of an electrical power grid structure and it is gaining more importance especially in smart grid concept. The mature structure of distribution systems is evolving due to the high penetration of distributed generation (DG) sources. Conventional protection schemes in distribution systems are prone to potential threats with increasing number of DG units. The characteristics of DG systems such as wind and solar energy conversion systems are generally uncertain in nature. These units add complexity to conventional protections schemes in terms of directional protection challenges. Besides, the integration of DG units to grid results in availability of new local energy sources in the points where loads are connected. Thus, misoperations and imperfect selectivity of relays can occur within the distribution system. These issues call for the need of a bi-directional relay operation and an operation strategy where adaptive protection and relay coordinations are applied in new distribution systems compatible with smart grid necessities. In this paper an adaptive protection scheme is proposed for distribution systems with DG. Simulation results on a modified Institute of Electrical and Electronics Engineers (IEEE) 4-node distribution system show that the proposed algorithm can perform adaptive relay coordination under various fault conditions. Compared with the conventional protection structure, relay coordination of adaptive protection scheme provides fast fault isolation and greater adaptation to different operating modes considering DG units. (C) 2015 Elsevier Ltd. All rights reserved.