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Due to various technical, economic and environmental concerns the concept of Microgrid has become popular in the electric energy industry. It's capability to operate in both grid-connected as well as an autonomous system in islanded mode is the distinct feature of the Microgrid concept. Hence, Microgrid control should provide seamless transition between grid-connected and islanded operations. Active-reactive (PQ) power control and voltage source inverter (VSI) control are two popular techniques employed in Microgrid control. This paper proposes a simplified VSI controller for dynamic analysis of the Microgrid operation. The proposed control algorithm is explained, modeled in MATLAB Simulink and the simulation results are presented for various operating scenarios to demonstrate the effectiveness of the proposed control scheme in providing a desirable dynamic performance for both the grid-connected and islanded operation mode of the Microgrid.