Islanding or nonislanding events in grid-connected distributed generation bring along a typical distinguishable transient signature in its frequency profile. This demarcation leads to the development of a new islanding protection approach, which is based on the estimation of frequency waveform parameter (transient\u27s frequency) by Matrix pencil (MP) method. To demonstrate the efficacy of the proposed MP method, four critical scenarios are considered in this paper for covering all possible disturbance events. These events are also compared along with a discrete wavelet transform (DWT) based islanding detection method in simulations as well as in RT-LAB-based real-time environment. It is noteworthy to mention that the proposed MP method has been found to have a positive edge over the DWT-based method in terms of robustness and chances of misidentification