The integration of Distributed Energy Resources (DERs) into distribution grids has become increasingly feasible and sustainable due to the development of microgrids. However, the development of an effective protection strategy remains a challenge in the implementation of microgrids. To address this challenge, this paper presents a simple and novel microgrid protection method based on superimposed components, Wigner distribution function (WDF) and alienation index-based. The proposed method develops a new fault detection index (FDI) by applying the alienation coefficient and WDF on a superimposed current signal to detect faulty events in the microgrid. The scheme is inherently phase segregated because the FDI is obtained for each phase individually. In addition, the proposed strategy introduces a new fault zone identification method based on the superimposed positive sequence reactive power (SPSQ). After obtaining the complete fault information, a relevant trip signal is generated to isolate the faulty section from the rest of the grid. The proposed methodology is evaluated through simulations using MATLAB/SIMULINK software. Various fault types, with varying parameters are simulated to validate the proposed approach. The results indicate that the proposed methodology is capable of recognizing, classifying, and locating all fault types in both grid-connected and islanded modes of operation.