Microgrids are the solution to quench the growing power demand of consumers. Renewable Energy System (RES) when integrated to microgrid makes the power flow bidirectional. Reconfiguration of microgrid occurs predominantly due to addition or removal of load or Distributed generator (DG), maintenance and faults in the network. Thus conventional protection schemes are not suitable for microgrids and hence pose key challenge to protection engineers. This paper proposes hybrid Kruskal-Dijkstra’s algorithm, that act as an aid to identify the shortest path from a faulted point to the nearest operating source. This ensures that only minimum number of consumers are affected during fault clearance. The proposed algorithm is tested and validated on an IEEE 43-bus microgrid distribution network. © 2017 American Scientific Publishers All rights reserved.