The flexible operation mode of microgrid poses a serious challenge to the protection, so this paper proposes a novel current protection mehtod for microgrid. It takes three typical faults as case study, and analyses the function of adaptive protection in connected mode and islanded mode. Based on it, a new protection scheme for microgrid is presented, and the master-slave working mechanism of the centralized protection of microgrid is also illustrated. At the same time, this paper proposes the overcurrent setting algorithm of three zones adaptive protection and designs the flow chart of fault identification. Based on the analysis of the drawbacks of the traditional overcurrent protection time limit coordination, an optimization scheme about the operation time limit in connected mode and islanded mode is also presented, and the advantages are analyzed through the cases. The theory and cases show that the adaptive protection method can identify the fault zone rapidly and reliably, meeting the need of microgrid.