Integration of microgrids into the main power systems imposes major challenges regarding reliable operation and control. Reliable operation means to be able to manage the microgrid in its two modes of operation; grid- connected and islanded, as well as handling the transition between these two modes. Several control strategies have been established in this area. This paper utilizes droop based control method due to its advantages of great flexibility, no communication needed, high reliability, and free laying. In this paper, one DG unit is controlled to set the voltage and frequency of the microgrid, VF mode. In contrast, the other DG units of the microgrid control their active and reactive power sharing, PQ mode. Controlling one inverter in VF mode results in a smooth transition between grid-connected and islanded operation.