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The phase circulating current (PCC) of the parallel three-phase inverter systems dramatically affects the power quality and conversion efficiency of the power grid. In this paper, a composite suppression strategy is proposed to solve the PCC issue by using the sliding mode control (SMC) approach and improved virtual impedance droop control. Taking the commonly used 2-group parallel three-phase inverter as an example, an inter- and intra-classification model is established by analyzing the sources of PCC. In order to suppress the inter-PCC, the traditional virtual impedance droop control is given, following the improved substitute by combining SMC. And the variables of the bus voltage, Q-U loop, P-f loop, and the virtual-induced reactance are also introduced for the robust control of the impedance droop. On the other side, a SMC-based suppression approach is designed to solve the issue of the intra-PCC. Its idea is to introduce a regulation factor for the space vector pulse width modulation (SVPWM) so that the zero-sequence voltage can be eliminated and the influence of the intra-PCC can be relieved. Comparative simulations and experiments validate the effectiveness of the methods proposed in this paper. [ABSTRACT FROM AUTHOR]