This paper introduces an enhancement of the protection and operation of the Future Renewable Electric Energy Delivery and Management (FREEDM) system. It uses the solid-state transformers to connect the residential A.C. and D.C. microgrids to the distribution system and fault isolation devices for faulty line isolation. In this paper, a current differential protection scheme has been proposed to detect faults in the FREEDM-based microgrid network. This method is based on the current measurement at the two-line terminals using phasor measurement units to ensure data synchronization and minimize the measuring error. Also, a communication scheme that is based on the Internet of things technology and Wi-Fi is constructed for data monitoring and interlinking between the relays, transducers, and the fault isolation devices in the two-terminals lines. A hypothetical FREEDM system has been used for the verification and testing of the proposed method. Different fault types at different locations and fault resistances have been applied to prove the effectiveness of the proposed protection method in detecting the fault condition. The performance of the proposed method is investigated using the security, dependability, and accuracy indices. A prototype of the FREEDM system is designed, implemented, and tested using the Proteus software simulator and in the laboratory. The results prove the efficiency of the proposed protection method in detecting and isolating the fault conditions in a fast, reliable, and accurate manner. Moreover, the protection scheme achieved high accuracy for all faults, equal to 98.825%.