This study proposes a new current-direction detection method to effectively determine faulted sections on trunk lines, source/load laterals for multi-microgrids. Depending on the purpose of fault detection and location on trunk lines, source branches or load branches, the corresponding digital relays will apply the proposed current-direction detection method and exchange the data to their adjacent relays through a neighbor communication system. Based on the simulation data, which include single phase to ground fault, double phase fault, double phase to ground fault, three phase fault of an analog signal machine, and the experiment data of INER multi-microgrid in 2015, the proposed current-direction detection method has been tested in detail. Field-test results have demonstrated that a prototype digital relay using the current-direction detection method can operate to detect and determine faulted sections in the INER multi-microgrid system. Last but not least, the ability of interrupting fault currents of a new static switch (a power-electronic switching device) has also been successfully tested with prototype digital relay.