Differential　protection　has　been　introduced　into　the　distribution　network　to　address　the　ineffectiveness　of　traditional　protection　due　to　the　uncertainties　of　power　flow　caused　by　the　access　of　multiple　inverter-interfaced　distributed　generation　(IIDG).　Designed　for　lower　data　synchronization　costs,　this　paper　proposes　a　novel　differential　protection　scheme　based　on　improved　dynamic　time　warping　(DTW)　distance.　The　proposed　algorithm　can　effectively　alleviate　the　singularity　caused　by　DTW＇s　excessive　X-axis　distortion　through　relaxation　search　and　derivative　estimation　and　minimize　the　impact　of　data　synchronization　errors　and　data　loss.　Based　on　the　proposed　algorithm,　the　protection　scheme　combined　with　the　feeder　terminal　unit　(FTU)　for　fast　fault　isolation　is　designed,　which　can　make　full　use　of　the　existing　equipment　and　reduce　costs.　Moreover,　multiple　influencing　factors　considered　in　this　scheme,　including　transition　resistance,　penetration　rate,　and　output　intermittency　of　IIDG,　variable　network　topology,　underground　cables,　and　hybrid　lines.　The　test　results　demonstrate　that　the　proposed　protection　scheme　can　effectively　isolate　short-circuit　faults　in　various　scenarios.　©　2013　IEEE.