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The requirement for power supply reliability and power quality has been increasing. When a fault occurs in distribution networks, fast locating and isolating the fault, restoring the power, and reducing outage time and area are becoming more and more crucial. The concept of fast self-healing has been proposed, which is also the requirement for smart grid development. In this paper, a self-healing reconfiguration technique is proposed for smart distribution networks with insertion of distributed generations (DGs). And a tree structure algorithm based on heuristic rules is proposed. Islands formed by DGs are used to deal with fault isolation and power restoration after a fault occurs. The effectiveness of the proposed algorithm is verified using a 26 bus bars test system with DGs.