The traditional protection devices installed in photovoltaic (PV) arrays generally detect line-line (LL) and line-ground (LG) faults when the fault current magnitude exceeds its threshold value defined by various international standards. However, the magnitude of fault current is greatly reduced, due to low irradiance levels, active maximum power point tracker, location of fault, minimal fault mismatch, and presence of blocking diodes. Consequently, majority of such faults remain obscured even when the irradiance reaches to a higher level and thereby constitute to reliability issues and severe fire risks. Therefore, both timely fault detection and localization become highly obligatory for sustainable power generation and safety. Thus, this article proposes a new, robust, and efficient fault localization method based on the principle of differential voltage measurement between PV modules of adjacent strings. For accomplishing this task, a new optimized voltage sensor arrangement with minimal number of sensors is followed. Moreover, the proposed convention 1) is proficient to detect any LL/LG faults independent of its detection challenges, 2) suits both grounded and floating PV systems, and 3) is compatible for systems with/without blocking diodes. For a realistic validation, testing has been performed on a small-scale grid-connected PV system and the efficacy in detecting various array faults is demonstrated via extensive investigations. © 1982-2012 IEEE.