This thesis presents seamless transition between the grid-connected and islanded mode of microgrid. The prominence of the seamless transition is to maintain the load voltage and frequency as well as constant power delivery during both the modes of operation of microgrid. In this thesis, voltage source converter (VSC) of PV generating unit operates in P-Q control mode in both grid-tied and islanded operation of microgrid due to its intermittent characteristics. The VSC of battery energy storage system (BESS) operates in P-Q control mode during grid-tied operation and in V-F control mode during islanded operation of microgrid. A fuzzy logic controller has been designed for V-F control during the islanded mode of operation of microgrid. The fuzzy logic controller can efficiently deal with non-linearity of power system as it does not depend on the mathematical model of the system. Also, the proposed fuzzy logic controller limits the switching transients as well as voltage swell and sags during the fault. The performance of fuzzy logic control is validated for seamless transition of microgrid from both the modes of operation through simulation in MATLAB/Simulink environment.