This paper proposed a fault type classification algorithm in a distribution system consisting of multiple distributed generations (DGs). The study also discussed the changing of signal characteristics in the distribution system with DGs during the occurrence of different fault types. Discrete Wavelet Transform (DWT)-based signal processing has been used to construct a classification algorithm and a decision tree to classify fault types. The input data for the algorithm is extracted from the three-phase current signal under normal conditions and during fault occurrence. These signals are recorded from the substation, load, and DG bus. The performance of the proposed classifying algorithm has been tested on a simulation system that was modeled after part of Thailand’s 22 kV distribution system, with a 2-MW wind power generation as the DG, connected to the distribution line by PSCAD software. The parameters that were taken into consideration consisted of the fault type, location of the fault, location of DG(s), and the number of DGs, to evaluate the performance of the proposed algorithm under various conditions. The result of the simulation indicated significant changes in current signal characteristics when installing DGs. In addition, the proposed algorithm has achieved a satisfactory accuracy in terms of identifying and classifying fault types when applied to a distribution system with multiple DGs.