Distribution networks are evolving towards the vision of smart grids, with increasing penetration of Distributed Generation (DG), introduction of Active Network Management (ANM) and potentially islanded modes of operation. These changes affect both fault levels and fault current paths and have been demonstrated to compromise the correct operation of the overcurrent protection system. This paper presents an adaptive overcurrent protection system which automatically amends the protection settings of all overcurrent relays in response to the impact of DG, ANM and islanding operation. The scheme has been developed using commercially available protection devices, employs IEC61850 based communications and has been demonstrated and tested using a Hardware-In-the-Loop (HIL) laboratory facility. A systematic comparison of the performance of the proposed adaptive scheme alongside that of a conventional overcurrent scheme is presented. This comparison quantifies the decrease in false operations and the reduction of mean operating time that the adaptive system offers.