The fast detection and accurate location on short-circuit faults has always been the research direction of AC microgrid fault protection. A short-circuit fault protection system for grid-connected AC microgrid is designed based on dsPIC33FJ32GP204 in this paper, which realizes the fast detection and regional location. The short-circuit fault simulation model is built on PSCAD, and all kinds of fault waveforms generated by simulation are imported into Proteus. The designed protection system is used to transform the wavelet energy spectrum of all kinds of fault waveforms generated by simulation, and then output the corresponding control signal to circuit breakers. Simulation results show that the control system can quickly perceive and accurately locate the microgrid short-circuit fault area and realize the output of selective protection signal.