The high-level proliferation of inverter-interfaced distributed generators (IIDGs) in modern distribution networks (DNs) has changed system topologies and fault current signatures, which compromises the protective relays in DNs. Investigating IIDG fault behaviors-based protection scheme will benefit the grid’s safety and stability. This paper proposes a novel current differential protection (CDP) scheme that considers the delay behaviors of positive- and negative-sequence component extractors for IIDGs in DNs. A frequency-domain analytical model of the fault current for a grid-connected IIDG with the PQ control strategy and a low-voltage ride-through (LVRT) capability is investigated. The dynamic behavior of the IIDGs considering the sequence-component extractor based on the Pade approximation is presented, where the T/4 delay extractor of the IIDGs causes a two-stage behavior in the fault transient process. It is found that a 5 ms error between the measured and actual values after the fault will affect the transient characteristics of the IIDGs. The transient current generated by the IIDGs during grid faults contains a large number of low-order harmonic components within the range of 0–200 Hz, which is significantly different to the current provided by the power grid. Therefore, the proposed CDP scheme uses protective relays at both terminals to obtain the required transient electric quantity using the Prony method. By constructing the frequency-characteristics ratio (FCR) and the exchanging FCR between two terminal relays, the developed protection criteria are implemented. The accuracy of the fault analysis method, whose maximum computational error is below 0.1%, and the feasibility of the proposed protection scheme are demonstrated by using a 10 kV DN in a PSCAD/EMTDC simulation, which can be applied to various fault conditions and traditional DNs without IIDGs.