This paper presents the real-time testing of a digital protection for microgrids operated in utility-connection and stand-alone modes. The tested protection is structured with coordinated digital relays, which are featured with a fault identification based on the wavelet packet transform (WPT). The coordination of the employed digital relays is established based on the second-level high-frequency subbands extracted from the d-q-axis components of the currents flowing through each point of branching. The second-level high-frequency subbands are extracted and parametrized by two sets of WPT coefficients. The first set of WPT coefficients is utilized for identifying faults, while the second set is employed to locate identified faults. The d-q WPT-based digital multirelay protection is realized without time-based coordination, adaptive features, or relay-to-relay communication. Performances of the d-q WPT-based digital multirelay protection are investigated for a laboratory microgrid. Test results demonstrate accurate, fast, reliable, and coordinated responses, along with insensitivity to the mode of operating the microgrid