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• Output line impedance of parallel-connected distributed generation sources. • Voltage and frequency restoration. • Improved come robust droop control method. • State-space small-signal modeling and investigation of a microgrid. • Power-sharing accuracy. • Microgrid hardware in loop test-bed. The control and protection are critically essential to facilitate the stable operation of an island microgrid. To accomplish the exact power sharing in an islanded AC microgrid, the frequency and the voltage restoration need to be sustained. In this regard, a robust control strategy pooling an improved droop with a virtual impedance control based droop control for power sharing with f/V restoration is proposed in this article. The proposed droop controller state-space small signal modeling and an investigation for the total microgrid system are presented in this article. Meanwhile, the robustness of the strategy is escalated for a step change in the system power loads. The overall controller performance has been tested in the hardware-in-loop (HIL) test-bed. [ABSTRACT FROM AUTHOR]