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In this paper, a model of the wind turbine (WT) with direct-drive permanent magnet generator (DDPMG) and its associated controllers is presented, based on which a small signal model is derived. The small signal stability analysis shows that the WT with DDPMG with the proposed controller is stable. To evaluate the control capability of the proposed controller, simulations are performed on a single machine infinite bus system and a four-machine system. The impacts of the WT with DDPMG on the stability of the power system are also studied in term of critical clear time (CCT). The transient stability margin of the system is improved with the integrating of the WT with DDPMG.