Energy storage system, solar photovoltaic and wind power generation systems constitute distributed generation (DG) system, which is widely established in recent years. In the grid-connected DG system, the islanding detection function is essential to avoid dangers. However, the existing islanding detection techniques have non-detection zone (NDZ) which is easily affected by local load conditions. This paper proposes a novel islanding detection method integrating with a two-stage magnification inspection approach to facilitate diagnostics of islanding detection in DG systems. Based on the proposed method, the detection time is shortened with NDZ eliminated effectively. Besides, the possibility of malfunction and impact of load conditions are greatly reduced. The proposed method doesn't need precise parameter setting for different applications. To demonstrate the feasibility of the proposed method, a grid-connected prototype lab system with ratings of 250 W rated power and 200 Vdc/110 Vac voltage is simulated and implemented, a system which involves different load conditions and interference tests. The results indicate that the proposed method can operate reliably and satisfy the IEEE 1547 standard.