Control strategies of distributed generation (DG) are investigated for different combination of DG and storage units in a microgrid. This paper develops a detailed photovoltaic (PV) array model with maximum power point tracking (MPPT) control, and presents real and reactive power (PQ) control and droop control for DG system for microgrid operation. In grid-connected mode, PQ control is developed by controlling the active and reactive power output of DGs in accordance with assigned references. In islanded mode, DGs are controlled by droop control. Droop control implements power reallocation between DGs based on predefined droop characteristics whenever load changes or the microgrid is connected/disconnected to the grid, while the microgrid voltage and frequency is maintained at appropriate levels. This paper presents results from a test microgrid system consisting of a voltage source converter (VSC) interfacing with a DG, a PV array with MPPT, and changeable loads. The control strategies are tested via two scenarios: the first one is to switch between grid-connected mode and islanded mode and the second one is to change loads in islanded mode. Through voltage, frequency, and power characteristics in the simulation under such two scenarios, the proposed control strategies can be demonstrated to work properly and effectively.