Data acquisition and supervisory control are usually performed using client-server architecture and centralized control in conventional power systems. However, the message transmission and fault clearing are too slow for large-scale complex power systems. Microgrid systems have various types of distributed energy resources (DERs) which are quite different in characteristics and capacities, thus, the client-server architecture and centralized control are inadequate to control and operate in microgrids. Based on MATLAB/Simulink (ver.R2012a) simulation software and Java Agent Development Framework (JADE) (JADE 4.1.1-revision 6532), this paper proposes a novel fault protection technology that used multi-agent system (MAS) to perform fault detection, fault isolation and service restoration in microgrids. A new topology identification method using the YBus Matrix Algorithm is presented to successfully recognize the network configurations. The identification technology can respond to microgrid variations. Furthermore, the interactive communications among intelligent electronic devices (IEDs), circuit breakers (CBs), and agents are clarified during fault occurrence. The simulation results show that the proposed MAS-based microgrids can promptly isolate faults and protect the system against faults in real time.