A fault locator system in a loop-shaped distribution system with inverter based distributed generations is proposed. The fault locator system is based on measured impedances calculated by voltage and current at a transformer feeder of the distribution substation and incoming feeder of the inverter based distributed generations. The validity of the fault locator system was investigated by PSCAD/EMTDC simulations. It is assumed that a three-phase short-circuit fault occurs in the loop-shaped distribution system and the proposed fault locator system estimates the fault location. The estimation error in regard to fault location was described on the basis of simulation results. A primary factor in the estimation error was identified as the rate of change of measured impedance with fault location. It was found that the effect of significant digits of the measured impedance on the estimation error in regard to the fault location.