The nature of distribution systems is changing from passive to active networks due to the integration of Distributed Energy Resources, especially Inverter-Based Distributed Generation (IBDG). This change presents challenges for existing fuse-based unidirectional protection schemes, as active networks experience bidirectional flow of power and small fault current contribution from IBDGs. Such fault behavior can impact the protection scheme’s sensitivity and selectivity, compromising the reliability of active distribution networks and leading to customer outages due to improper fault isolation. The problem is exacerbated in networks that allow the islanded mode of operation. Upgrading the entire protection system to microprocessor-based relays is expensive. Instead, this work proposes a planning strategy to optimally upgrade protective devices. The proposed framework is able to incorporate IBDG integration plans, distribution system reliability targets, protection requirements, and economic viability throughout the planning horizon. The obtained strategy determines the optimal number, location, and deployment time of protective devices in consideration of network characteristics. The developed optimization model is formulated as a Mixed-Integer Linear Programming problem. The results verify the proposed framework’s ability to economically upgrade the protection scheme while enhancing the reliability of the active distribution network with IBDGs.