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With more and more distributed generation (DG) connected in, the conventional distribution systems which are radical in nature become multi-source systems. The traditional fault location method is no longer adaptive. This paper proposed an effective fault location method based on Multi-Agent System (MAS) and the extended impedance-based fault-location algorithm in ineffectively grounded distribution systems with DG. To short-circuit faults, this method can locate the fault-association-setion firstly by MAS and then can deduce the fault distance using measurements at the sending-end and the synchronized output current of DGs. Simulation results have demonstrated that the proposed algorithm is accurate.