The protection of AC microgrids (MGs) is an issue of paramount importance to ensure their reliable and safe operation. Designing reliable protection mechanism, however, is not a trivial task, as many practical issues need to be considered. The operation mode of MGs, which can be grid-connected or islanded, employed control strategy and practical limitations of the power electronic converters that are utilized to interface renewable energy sources and the grid, are some of the practical constraints that make fault detection, classification, and coordination in MGs different from legacy grid protection. This article aims to present the state-of-the-art of the latest research and developments, including the challenges and issues in the field of AC MG protection. A broad overview of the available fault detection, fault classification, and fault location techniques for AC MG protection and coordination are presented. Moreover, the available methods are classified, and their advantages and disadvantages are discussed.