With the significant development in power electronic technology, a new concept, microgrid has been adopted in recent years to increase efficiency and reliability of power system. Microgrids are electricity system of modern and small scale versions. As the energy sources of microgrid can include fuel cells, solar, wind and other energy sources, the multiple distributed energy sources in parallel with the ability of islanded operation would lead to the high reliability of electric power supply. Furthermore, microgrid could cut down the distance between the power generation and local loads, resulting in decreasing the cost of electric power transmission. This thesis focuses on the reliable operation of microgrid that includes islanding detection, islanded operation, reconnection with the main power grid, and energy storage system. As unexpected disconnection from the power grid may cause adverse effects on the microgrid, the islanding occurrence must be detected exactly and promptly. In this thesis passive methods using harmonic detection, an active method using high frequency signal injection and their combination have been adopted for successful islanding detection. A very effective control technique based on a combination of weak frequency and voltage droops with PQ control has been used to control paralleled inverters of microgrid for autonomous operation. Reconnection with the main power grid is also implemented by introducing phase compensation to eliminate the voltage phase angle difference between microgrid and power grid. Finally, an energy storage system is introduced to eliminate the power gap caused by drawbacks of renewable energy source between total power demand and power generation. It is able to inject power into microgrid, or draw power from microgrid smoothly. All the results have been successfully implemented in Simulink using code based method, which is close to microcontroller or DSP implementation.