In this article, we study an ad hoc distributed automated incident detection algorithm for highway traffic using vehicles that are equipped with wireless communications, processing, and storage capabilities (referred to as VGrid vehicles). Each VGrid vehicle periodically broadcasts beacon messages with its speed, location, and lane information. Using these beacons, each VGrid vehicle builds and maintains information about different sections of the road. Using such information, each VGrid vehicle independently performs an anomaly detection algorithm based on the traffic density, speed, and the number of lane changes to identify incidents. The robustness of the detection is improved by a voting scheme in which a consensus, among participating VGrid vehicles, is achieved when a fixed number of votes are accumulated. We use a simulation tool called VGSim to study the performance of our detection algorithm in a highway scenario. The results show that our distributed incident detection algorithm has low false positive rate, zero false negative rate, and can still achieve incident detection with as little as 10 percent penetration of VGrid vehicles.