This study presents the development of an advanced power quality monitoring (PQM) system using dilated convolutional deep neural networks (DCDNN) for smart nanogrids. Traditional convolutional neural networks (CNNs) face challenges in efficiently handling high-dimensional data and identifying nuanced features due to their limited receptive field. To overcome these limitations, our DCDNN model employs a novel use of dilated convolutions to expand the receptive field without increasing network complexity, enabling the capture of long-range dependencies essential for accurate classification of power quality disturbances (PQDs). In addition, the integration of multi-channel time-series data processing, including voltage, current, and frequency measurements, is unique to our approach. The model processes multi-channel time-series data, including voltage, current, and frequency measurements, achieving an average accuracy of 98.9% across 29 PQD classes and 100% accuracy in 6 main classes, with a reduced detection time of 47 µs per segment. This approach not only improves real-time disturbance detection but also enhances the reliability and efficiency of electrical systems. The results demonstrate significant improvements over existing methods, underscoring the potential of DCDNNs in advancing PQM practices. Future work will focus on validating the model in real-world conditions and optimizing its computational efficiency.