As today's power grid is evolving into a densely interconnected cyber‐physical system (CPS), a high fidelity and multifaceted testbed environment is needed to perform cybersecurity experiments in a realistic grid environment. Traditional standalone CPS testbeds lack the ability to emulate complex cyber‐physical interdependencies between multiple smart grid domains in a real‐time environment. Therefore, there are ongoing research and development (R&D) efforts to develop an interconnected CPS testbed by sharing geographically dispersed testbed resources to perform distributed simulation while analysing simulation fidelity. This paper presents a networked federation testbed for cybersecurity evaluation of today's and emerging smart grid environments. Specifically, it presents two novel testbed architectures, including cyber federation and cyber‐physical federation, identifies R&D applications, and also describes testbed building blocks with experimental case studies. It also presents a novel co‐simulation interface algorithm to facilitate distributed simulation within cyber‐physical federation. The resources available at the PowerCyber CPS security testbed at Iowa State University (ISU) and the US Army Research Laboratory are utilised to develop this platform for performing multiple experimental case studies pertaining to wide‐area protection and control applications in power system. Finally, experimental results are presented to analyse the simulation fidelity and real‐time performance of the testbed federation.