This paper proposes the new adaptive protection algorithm for inverse-time overcurrent relays (OCRs) to ensure their proper operating time and protective coordination. The application of the proposed algorithm requires digital protection relays with microcontroller and memory. The operating parameters of digital OCRs are adjusted based on the available data whenever system conditions (system with distributed generation (DG)) vary. Moreover, it can reduce the calculation time required to determine the operating parameters for achieving its purpose. To verify its effectiveness, several case studies are performed in time-domain simulation. The results show that the proposed adaptive protection algorithm can keep the proper operating time and provide the protective coordination time interval with fast response.