This paper discusses a critical study of fault detection, classification, and identification in distribution systems compensated through a distribution static synchronous compensator (D-STATCOM) using discrete wavelet transforms (DWT) and a radial basis neural network (RBFNN). The efficacy of the proportional integral (PI) controller is discussed in the simulation during normal, voltage sag, and swell conditions. Then, the Daubechies mother wavelet (db4) is used here to extract and decompose the fault current signals because of its high accuracy of detection with less processing time. The models are subjected to different conditions of faults, such as line to ground (LG), line to line (LL), double line to ground (LLG), and three phases (LLL and LLLG) with different fault resistance. The novelty of the scheme is that DWT and RBFNN techniques were compared and proven effective in demonstrating the faulty conditions. To validate the proposed approach, a simulation study is carried out in MATLAB with various operating conditions, and it is shown that the proposed method can depend on abundantly protecting the distribution grid from faulty conditions.