The demand for a low voltage direct current (LVDC) microgrid is increasing by the increase of DC-based digital loads and renewable resources and the rapid development of power electronics technology. For the stable operation of an LVDC microgrid, it is necessary to develop a protection method. In this paper, the new protection scheme considering the fault section is proposed using wavelet transform (WT) in an LVDC microgrid. The fault sections are classified into DC side of the alternating current (AC)/DC converter, DC/DC converter connected to photovoltaic (PV) system, DC line, and DC bus. The characteristics of fault current at each fault section are analyzed. Based on these analyses, the new protection scheme including the fault section estimation is proposed using WT. The proposed scheme estimates the fault section using the detail component after performing WT and sends the trip signal to each circuit breaker according to the fault section. The proposed protection scheme is verified through various simulations according to the fault region and fault current using electromagnetic transient program (EMTP)/ATPDraw and MATLAB. The simulation results show that the fault section is accurately determined, and the corresponding circuit breaker (CB) operations are performed.