Electricity can be provided to small-scale communities like commercial areas and villages through a microgrid, one of the small-scale, advanced, and independent electricity systems out of the grid. Microgrid is an appropriate choice for specific purposes of reducing emission and generation costs and increasing efficiency, reliability, and the utilization of renewable energy sources. /e main objective of this paper is to elucidate the combined economic emission dispatch CEED problem in the microgrid to attain optimal generation cost. A combined cost optimization approach is examined to minimize operational cost and emission levels while satisfying the load demand of the microgrid. With this background, the authors proposed a novel improved mayfly algorithm incorporating Levy flight to resolve the combined economic emission dispatch problem encountered in microgrids. /e islanded mode microgrid test system considered in this study comprises thermal power, solar-powered, and wind power generating units. /e simulation results were considered for 24 hours with varying power demands. /e minimization of total cost and emission is attained for four different scenarios. Optimization results obtained for all scenarios using IMA give a comparatively better reduction in system cost than MA and other optimization algorithms considered revealing the efficacy of IMA taken for comparison with the same data. /e proposed IMA algorithm can solve the CEED problem in a grid-connected microgrid.