This thesis is concerned with the generation control in small isolated power systems consisting of inverter interfaced generation systems. First the components of an individual distributed generation system (DGS) as well as the corresponding control schemes for active and reactive power flow are discussed and implemented. Then the contribution of multiple DGS to meet the requirement of the loads in both gridconnected and island operations are discussed. Having evaluated the performance of each developed model such as voltage source inverter, PQ and PV controlled as well as reference DGS, the impact of voltage degradation on power load control in isolated systems is analyzed. Finally a new method for generation control in a small power system based on power sharing between multiple DGS with voltage degradation consideration as the last alternative for sustaining the system is proposed and implemented.-11D