This paper presents the implementation and performance evaluation of a new digital protection for microgrid systems, The proposed digital protection is based on utilizing the wavelet packet transform (WPT) for extracting the first-level high-frequency subband contents present in the $d$– $q$-axis current components. The utilized WPT is realized by a half-band digital high-pass filter, whose coefficients are determined by the Daubechies $db4$ wavelet basis functions. The $d$– $q$ WPT-based digital protection is implemented for offline and experimental performance evaluation. Offline tests are conducted using data collected from a simulation model of a microgrid located in Fermeuse, NL, Canada. The experimental tests are conducted on a laboratory microgrid system that is constructed as a scaled version of the Fermeuse microgrid. Several transient disturbances occurring in different parts of the test microgrid systems are investigated both offline and in experimentation. Performance results demonstrate significant abilities of the $d$– $q$ WPT-based digital protection for fast, accurate, and reliable detection, classification, and response to different transient disturbances. In all tested faults, the developed digital protection is able to generate a trip signal in less than a quarter cycle based on the 60-Hz system operating frequency. [ABSTRACT FROM PUBLISHER]