The Increasing demand of clean energy has evoked huge interest in microgrid that uses renewable energy sources like solar, wind, fuel cell and control of microgrid components such as inverters. The neutral point clamped multilevel inverters have gained prominence due to its substantial advantage of power quality in islanded mode and coupling at a common point of main grid in grid connected. The islanded operation of microgrid necessitates frequency and voltage regulation based on the filter inductance current and capacitor voltage. The paper investigates the droop based decoupling control of neutral point clamped 3-level inverter in islanded mode of operation of microgrid. The control strategy is carried out in rotating reference frame. The set reference for the control strategy is generated by regulation of real and reactive power. The proposed control strategy is accomplished in Matlab Simulink environment and results were analyzed. © 2017 IEEE.