This study presents a novel magnetic-based solid-state dual-function fault current limiter and power flow controller (FLPFC) that offers a promising application for safe and controllable interconnection of microgrids to upstream AC grids. The proposed structure includes series reactors and power electronic switches that protects microgrid from upstream AC grid short-circuit fault and it controls the power flow between microgrid and upstream grid. Performance of the proposed FLPFC is analysed and simulated using Matlab/Simulink and results are confirmed by experimental tests.