The growing penetration of converter interfaced generation creates unprecedented challenges to protection strategies at all voltage levels. This paper proposes a novel Negative Sequence Current Injection (NSCI)-based active protection scheme for islanded microgrids. The faulty section identification method based on the negative sequence current increment between the pre-injection and current generation steady state conditions enables the scheme to achieve an excellent High Impedance Fault (HIF) detection capability. The proposed NSCI control algorithm maintains the phase angle of the negative sequence current fixed during injection progress, thus providing a highly discriminative feature which facilitates the correct identification of the faulty section. As no form of communication is required the proposed protection scheme can be very cost-effective and flexible in practical applications. Following the detailed description of the principle of operation and the setting procedure, a systematic simulation-based validation is undertaken considering a variety of influencing factors such as fault type, resistance and position, as well as impact of load distribution under HIFs, and possible presence of Synchronous Generators (SGs). The results show that the scheme has an excellent detection and discrimination ability, especially during unbalanced faults, and is not affected by load distribution or behaviour of other sources, including synchronous machine