Faults in dc microgrids require quicker interruption than those in traditional ac power systems. This is due to the reduced stiffness of dc microgrids being powered by low inertia distributed energy resources interfaced through power electronic converters. For a high impedance fault, the limited magnitude of the fault current poses additional challenges in detection and identification of fault location in the system, with difficulty in distinguishing the fault condition from the normal operating condition. This article proposes a new cost-effective protection system for fast identification, selective isolation of short circuit and high impedance faults, and system restoration in such dc microgrids. It is achieved through proper coordination of source converters with intelligent three tie contactor switch units (ICU) and there are no solid-state circuit breakers in action. The high impedance faults are identified through multi resolution analysis of the locally measured current signals with discrete wavelet transform and K -nearest neighbor-based classifier at each source converter and contactor. The selectivity is achieved through adaptive resistance time curves set by the programmable relay units installed at each ICU node in the system.