Penetration of distribution generation (DG) into power system might disturb the existing fault diagnosis system. The detection of fault, fault classification, and random changes of direction of fault current cannot always be monitored and determined via on-line by conventional fault diagnosis system due to DG penetration. In this paper, a fault current characterization which based on fuzzy logic algorithm (FLA) is proposed. Fault detection, fault classification, and fault current direction are extracted after processing the measurement result of three-phase line current. The ability of fault current characterization based on FLA is reflected in directional overcurrent relay (DOCR) model. The proposed DOCR model has been validated in microgrid test system simulation in Matlab environment. The simulation result showed accurate result for different fault location and type. The proposed DOCR model can operate as common protection device (PD) unit as well as unit to improve the effectiveness of existing fault diagnosis system when DG is present.