The design of an effective protection system for inverter-based microgrids is a complicated engineering challenge. This is due to the fact that inverters have limited fault current capabilities, and that the conventional overcurrent protection is not suitable for inverter-based microgrids. This paper introduces a novel protection method for inverter-based microgrid using a current-only polarity comparison. The proposed method is based on the phase difference between the pre-fault and fault current components. The method responds to faults in both grid-connected and autonomous operation modes and provides a new way to identify faulted sections. Simulations of an inverter-based microgrid with a relay model are conducted using PSCAD/EMTDC software. The results show that the proposed method can detect faults in inverter-based microgrids.