This thesis is concerned with the application virtual voltage-frequency frame in improving the dynamic behavior or standalone microgtids. The use of distributed energy resources is getting increasingly more common in modern power systems. Although these resources are aimed to solve some common problems of existing power systems, the high number of them would cause new set of problems for power systems. A new concept, called microgrid, has been recently introduced and implemented based on a cluster or sources/loads which can work independently without connection tie to the grid. This mode of operation is called standalone or islanding mode. Using the microgrid is a solution that not only benefits from the advantages of distributed energy resources, but it can also remove some of the problems created by these sources. Microgrids increase the power quality and reliability of power network. In this thesis the basic principles of microgrids are explained and some of the implemented macrogrids across the world and their details are described. Islanding is an important mode of operation in microgrids, and thus enhancing the reliability of customers in this mode must be carefully maintained. Many distributed energy resources used in microgrids are based on static converters. In terms of control strategy, two methods are used to control microgrids. The first, known as centralize control, uses a central controller along with fast communication media to exchange control signals among each other. Another one, called decentralized control, employs only local parameters to control each microsource and fulfills its requirements. Decentralize control is prone to power oscillations. One method to damp these oscillations is to use virtual frequency-voltage frame. In this thesis the virtual frequency - voltage frame method is introduced and its structure is described. The main characteristic of this method is active/reactive power decoupling. The large signal studies in microgrids are presented in the presence of two methods, i.e. conventional droop and virtual frequency - voltage frame method. It is shown how by using virtual frame, the dynamic stability of the system is improved. The weakness of virtual frame control is presented and by using the concept of virtual frame control, a method is suggested to solve this problem. Finally the larger microgrid is used as a test network and the virtual frame method is used to control this network. Key Words: Distributed Energy Resources, Islanded Microgrid, Conventional droop Control, Virtual Voltage-Frequency Control, Stability.