Microgrids are inevitable at distribution level of power system networks. They are the solution to the growing power demand. Reconfiguration occurs in microgrid mainly due to connection and disconnection of the distributed generators (DG) and loads. Reconfiguration in turn causes topology changes and hence conventional protection schemes may not be applicable in microgrid for efficient fault clearance. This paper proposes a Chazelle-Dijkstra method using Fibonacci Heap algorithm which detects the shortest path between the faulty point to the nearest operating source. This ensures that during fault clearance minimum portion of network is disconnected. This algorithm is tested and validated on 118-bus standard microgrid network. © 2017, UK Simulation Society. All rights reserved.