Pilot contamination is a critical issue in distributed massive MIMO networks, where the reuse of pilot sequences due to limited availability of orthogonal pilots for channel estimation leads to performance degradation. In this work, we propose a novel distributed pilot assignment scheme to effectively mitigate the impact of pilot contamination. Our proposed scheme not only reduces signaling overhead, but it also enhances fault-tolerance. Extensive numerical simulations are conducted to evaluate the performance of the proposed scheme. Our results establish that the proposed scheme outperforms existing centralized and distributed schemes in terms of mitigating pilot contamination and significantly enhancing network throughput.