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Microgids have been proposed to improve reliability and stability of electrical system and to ensure power quality of modern grid. In this paper, different protection strategies are investigated for adaptive safety protection. It is essential to protect a Microgrid in both the grid-connected and the islanded mode of operation against all different types of faults. This paper describes Microgrid protection and safety concept with central control and monitoring unit where multifunctional intelligent digital relay could be used. This central control & monitoring infrastructure is used for adaptive relay settings strategy for Microgrid protection. Also FPGA based decision making is proposed for Microgrid protection to shortening response time and ensure adaptive protection.