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This paper proposes a smooth transition control strategy for voltage-source inverters between standalone (SA) and grid-connected (GC) modes of operation. In the GC mode, the amount of power exchanged with the utility grid is controlled by regulating the phase currents. In the SA mode, the load voltage is regulated by the inverter with its phase dictated by the inverter control. The transition between SA and GC operations that will ensure continuous power delivery to the load requires continuation in the phase of the system voltage. The proportional-integral, trapezoidal, sinusoidal, and staircase frequency variation techniques have been analyzed to find the best approach for minimizing the total harmonic distortion (THD). A smooth frequency variation technique has been developed, which provides lower THD on the voltage waveforms compared with the other techniques. The new algorithm has been implemented on a 5-kW single-phase utility interactive inverter having the SA operation capability. The simulation and experimental results show that the proposed technique provides seamless transition between the inverter modes of operation with minimal distortion at the inverter output voltage.