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This paper concentrates on the design and analysis of a controller for multibus microgrid system. The controller proposed for use with each distributed generation (DG) system in the microgrid contains inner voltage and current loops for regulating the three-phase grid-interfacing inverter, and external power control loops for controlling real and reactive power flow and for facilitating power sharing between the paralleled DG systems when a utility fault occurs and the microgrid islands. The controller also incorporates synchronization algorithms for ensuring smooth and safe reconnection of the micro and utility grids when the fault is cleared. With the implementation of the unified controller, the multibus microgrid system is able to switch between islanding and grid-connected modes without disrupting the critical loads connected to it. The performance of this unified controller has been verified in simulation using a real-time digital simulator and experimentally using a scaled laboratory prototype.