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In islanding microgrids (MGs), distributed generation units are in charge of controlling voltage, frequency, and current of the grid on their own without any assistance from the main grid. Therefore, it is of utmost importance to select and design a controller that is robust against disturbances and load variations. In this study, a new sliding mode controller with a rotating reference voltage algorithm is proposed that improves the load sharing between distributed generators (DGs) in an islanded mode MG. In the proposed algorithm, in order to improve the performance and convergence rate of the controller, the amplitude of the reference voltage signal of the controller is adaptively modified. As a case study, the proposed strategy is studied based on the assumption that there are three DGs in the grid. One of the DGs is in charge of regulating voltage and frequency based on a reference signal, and the two other DGs are responsible for load sharing and loads the current control mode. The MG under study consists of three low-voltage distributed generation units operating in parallel mode. In order to have a realistic case study, it is assumed that the MG consists of different types of loads such as balanced/unbalanced resistive, inductive, and nonlinear loads. The extensive simulations are applied to indicate that the proposed framework is able to provide more desirable total harmonic distortion (THD), lower steady-state error, and faster response compared with classic sliding mode controllers. [ABSTRACT FROM AUTHOR]