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This paper describes control methods for proper load sharing between parallel converters connected to microgrid supplied by distributed generators. The model of the microgrid power system is simulated in PSCAD. It is assumed that the microgrid supplies a load both in grid connected and islanded modes. Both passive loads and inertial loads are considered. A control strategy is proposed to improve the system performance through seamless transfer between islanded and grid connected modes. The controller is capable of handling constant impedance, as well as motor loads. The smooth transition between the grid connected and off grid mode is achieved by changing the control mode from voltage control in islanded mode to state feedback control in grid connected mode. Its efficacy has been validated through simulation for various operating conditions.