The optimal coordination of overcurrent relays (OCRs) has recently become a major challenge owing to the ever-increasing participation of distributed generation (DG) and the multi-looped structure of modern distribution networks (DNs). Furthermore, the changeable operational topologies of microgrids has increased the complexity and computational burden to obtain the optimal settings of OCRs. In this context, classical approaches to OCR coordination might no longer be sufficient to provide a reliable performance of microgrids both in the islanded and grid-connected operational modes. This paper proposes a novel approach for optimal coordination of directional OCRs in microgrids. This approach consists of considering the upper limit of the plug setting multiplier (PSM) as a variable instead of a fixed parameter as usually done in traditional approaches for OCRs coordination. A genetic algorithm (GA) was implemented to optimize the limits of the maximum PSM for the OCRs coordination. Several tests were performed with an IEC microgrid benchmark network considering several operational modes. Results showed the applicability and effectiveness of the proposed approach. A comparison with other studies reported in the specialized literature is provided showing the advantages of the proposed approach.