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This paper focuses on describing and evaluating a controller that is used for the operation of a microgrid when it becomes isolated. A microgrid is connected to the medium voltage network when operating under normal conditions. However, both scheduled and forced isolation can happen during the operation of the microgrid, and under these conditions, the microgrid must still be able to continue to operate stably and autonomously. The controller proposed for each distribution generation (DG) system has inner voltage and current loops for regulating the three-phase grid-interfacing inverter and an external power control loop for facilitating power sharing between the paralleled DG systems when a utility fault occurs and the microgrid becomes islanded. Simulation of the proposed controller is performed using Matlab/Simulink and the results suggest that this control method is a feasible solution to control the microgrid during both grid-connected and islanded modes.