This paper proposes the use of a smart saturated amorphous alloy core-based fault current limiter (SAACFCL) to improve the LVRT capability of distributed generators (DGs) during votlages sag. The B-H loop of the amorphous alloy core used in the SAACFCL is very narrow compared to convensional sheet steel iron cores which are commonly used for fault current limiter (FCL). This narrow B-H loop characteristics of amorphous alloy indicates that it cause low core losses and it will require small dc excitation current compared to sheet steel core. Under steady-state grid condition, this proposed SAACFCL behaves as an air core FCL, hence, imposes low impedance and has very negligible effect on the grid operation. However, during a deep voltage sag caused by large fault currents, the core of the SAACFCL desaturates and its ac impedance is increased which limit the fault currents and improve LVRT capability of DGs. The performance of the SAACFCL in improving the LVRT capability of DGs has been validated using a doubly-fed induction generator (DFIG) based wind energy system equipped with the proposed SAACFCL. This system has been simulated using MATLAB/Simulink simulation software. The simulation results with and without the SAACFCL show that the SAACFCL is capable to achieve the LVRT successfully and can meet the grid code requirement. The performance of the SAACFCL in limiting fault current and improving the LVRT has also been compared with that of the superconducting FCL (SFCL). The SAACFCL promises better performances than SFCL.