This paper proposes method for detection, estimation of Thevenin equivalent parameters to describe power system behavior. Thevenin equivalent estimation is a challenge due to variation in system states caused by power flow in the network. Thevenin equivalent calculation based on changes in system with multiple sources integrated with grid, isolated distributed generator system is analysed and nonlinear least square fit estimation technique for algorithm is adopted. Linear least square fit is used with a linearized model. Performance evaluation of proposed method is carried out through mathematical model, nonlinear and linear least square fit based algorithm technique and simulation through MATLAB/SIMULINK package. Accurate grid and source side impedance estimation technique is applicable for distributed generation sources interfaced with grid to improve dynamic response, stability, reliability when subjected to faults or any other disturbances in network. Algorithm can accurately estimate Thevenin equivalent of multiple sources connected in parallel simultaneously with voltage and current phasor measurements at point of common coupling. Mathematical analysis and simulation results validate the effectiveness of proposed method.