Localization is a fundamental issue for many applications in wireless sensor networks. Without the need of additional ranging devices, the range-free localization technology is a cost-effective solution for low-cost indoor and outdoor wireless sensor networks. Among range-free algorithms, DV-hop (Distance Vector - hop) has the advantage to localize the mobile nodes which has less than three neighbour anchors. Based on the original DV-hop algorithm, this paper presents two improved algorithms (Checkout DV-hop and Selective 3-Anchor DV-hop). Checkout DV-hop algorithm estimates the mobile node position by using the nearest anchor, while Selective 3-Anchor DV-hop algorithm chooses the best 3 anchors to improve localization accuracy. Then, in order to implement these DV-hop based algorithms in network scenarios, a novel DV-hop localization protocol is proposed. This new protocol is presented in detail in this paper, including the format of data payloads, the improved collision reduction method E-CSMA/CA, as well as parameters used in deciding the end of each DV-hop step. Finally, using our localization protocol, we investigate the performance of typical DV-hop based algorithms in terms of localization accuracy, mobility, synchronization and overhead. Simulation results prove that Selective 3-Anchor DV-hop algorithm offers the best performance compared to Checkout DV-hop and the original DV-hop algorithm.