An implementation of a new islanding detection technique based on modal components of the voltage signals is presented in this paper. It is based on derivation of islanding detection factor which is derived from the modal transformation of the input voltage signals. Authenticity of the presented technique has been verified by developing a laboratory prototype of the distribution network along with distributed generator. From the developed laboratory prototype, various islanding cases with varying positive/negative active and reactive power mismatches and different non-islanding events have been generated. The experimental results show that the presented algorithm is able to differentiate between islanding situation and non-islanding events efficiently. Moreover, it is able to sense islanding situation rapidly as it operates within three and half cycles after the inception of event. Furthermore, the proposed scheme is able to identify islanding situation even in case of perfect power balance condition. In addition, the presented scheme provides better stability against various non-islanding events and hence, avoids nuisance tripping. At the end, comparative evaluation of the proposed scheme with the existing schemes clearly indicates its superiority in distinguishing islanding situation with non-islanding events.