Communication networks are extensively used in microgrid (MG) networks for information sharing under distributed secondary control. The shared control information experiences inherent time delay while traversing the communication channels. This paper presents a communication latency impact analysis on dynamic average consensus-based secondary control scheme in an islanded MG. The proposed control scheme synchronizes the voltage and frequency of an islanded MG to their nominal values. A permissible communication delay bound is derived using the solution of delay differential equation model of the dynamic consensus algorithm. Also, the effect of communication latency on the convergence rate of the control scheme is presented. The relationship between maximum degree of the communication graph and permissible delay bound is established. Furthermore, the effectiveness of the proposed control scheme is evaluated by simulating a MG test system using MATLAB/SimPowerSystem. The effect of communication latency is presented by simulating a set of fixed link delays and results show that the convergence time increases with an increase in time delay. © 2018 IEEE.