Distributed generations (DGs) have been increasingly addressing the ongoing power deficit in the electricity market. However, a significant concern in DG-integrated microgrids is the detection of accidental islanding. To tackle this issue, this article proposes a cost-friendly, novel data-driven passive islanding detection scheme named EEMD-HOBRC, combining noise-assisted ensemble empirical mode decomposition (EEMD) and a hybrid optimization-based random forest classifier (HOBRFC). The detection scheme employs a diverse set of features extracted from both raw and EEMD decomposed signals. Essential features are selected using the binary grey wolf optimizer (BGWO) to reduce computational burden. To further improve classification accuracy, the parameters of the random forest classifier are optimized through a hybrid particle swarm and reformed grey wolf optimization (PSRGWO) technique with Cohen’s kappa index as the cost function. The proposed technique is rigorously validated in two different multi-DG environments, encompassing islanding and various nonislanding events. The results demonstrate the effectiveness of the approach in terms of enhanced accuracy, detection time, and performance under both noisy and noise-free conditions. The accuracy of detection under ideal and high noise scenarios is found to be 99.88% and 99.2%, respectively, with maximum detection time of 34.27 ms. Comparative analysis with other algorithms also supports the superiority of the proposed technique. Finally, the method is successfully applied to shrink the nondetection zone (NDZ) with minimal power mismatch, further enhancing its utility in practical applications.