The emerging trends in the microgrid development and the increasing penetration of distributed energy resources (DERs) in the distribution networks urge the modification in the existing conventional protection techniques. The integration of DERs changes the radial nature of the network, and thus, the schemes designed for such networks fail to operate for the microgrid system. Hence, a new fault detection technique is required for the microgrid system. In this article, a new fault detection scheme is developed for detecting the low-impedance faults (LIFs) as well as high-impedance faults (HIFs). The detection of HIFs is of major concern as these faults lead to a very low fault current value, which makes them undetectable by the conventional overcurrent relays. The proposed scheme uses the cumulative sum value of the differential negative-sequence impedance angle (DNSIA) as the fault detection parameter for generating the trip signal. The simulation results show that the proposed method effectively detects LIFs and HIFs accurately. The proposed scheme is independent of the type of faults, type of DGs, and the value of fault impedances. Furthermore, the proposed scheme also discriminates between the switching transients and faults effectively. The IEEE 13-bus test system is modeled and simulated on real time digital simulator (RTDS)/RSCAD platform. The method is further validated for the real-time implementation by developing the experimental setup for performing the control hardware-in-the-loop.