The invention discloses a protection method for a closed-loop power distribution network containing a distributed power supply. The method comprises the following steps: accessing a DG to a power supply branch of the power distribution network, and arranging a DG circuit breaker on the access bus of the DG, wherein the DG circuit breaker is used for short-circuit current detection and direction judgment; connecting the tail end of the power supply branch with the DG and the tail end of another power supply branch through an interconnection switch to form the closed-loop power distribution network; adopting a longitudinal overcurrent protection technology for the closed-loop power distribution network, and carrying out opposite protection action by an upstream line if the upstream of the DGaccess bus is faulted in order to achieve isolation and maintain the DG in a power supply state; and carrying out protection action by a downstream line if the downstream of the DC access bus is faulted in order to achieve isolation and keep the DG in the power supply state. The method can isolate any fault of the closed-loop power distribution network in a very short time, at most one bus loadis lost, and the DG is not cut off, so the power supply reliability and the DG utilization rate of the closed-loop power distribution network can be effectively improved.