Abstract At present, the commonly used active and passive islanding detection methods have their own shortcomings, and the islanding detection effect is difficult to meet the requirements. Therefore, a new detection method based on wavelet signal processing and artificial intelligence to identify islanding is proposed in this paper. In this method, the feature quantities required for islanding detection are obtained by wavelet transform and signal processing, and then the feature quantities are identified by neural network to determine whether the islanding is generated in distributed generation system. Wavelet transformation has a strong ability of signal feature extraction, while the neural network has strong learning and identification abilities, the combination of the both is beneficial to improve the success rate of islanding detection. Simulation verification shows that the new islanding detection method proposed in this paper can detect islanding quickly and accurately, and the performance of islanding detection has been significantly improved.