As distributed generation resources penetrate into distribution systems, protection and service continuity are becoming major issues. A new approach for protection coordination and higher reliability of a distribution system with distributed generation is explored in this paper. The concept of central coordination relay (CCR) is developed for this purpose. After a brief introduction of the design and operating procedures of CCR, the utilization of the proposed relay on two feeders of a substation in the Kocaeli region of Turkey is simulated using DIgSILENT PowerFactory. The study results show that CCR can provide better protection coordination and improved reliability indices for distributed generation systems.