Microgrids (MGs) is the interface for the distributed generation using voltage source inverters (VSIs). The MGs can be operated in autonomous and grid-connected modes. In grid- connected MGs, micro sources are connected locally to feed the microgrid loads and storage systems and through a static transfer switch (STS), the MG is connected to the main electrical grid. In autonomous mode, MGs are prone to instability problems, because they do not have grid support and power unbalances can destabilize the system. The problem arises when more than one generator is connected to the MG and shares its power supporting the locally connected loads. If the difference between the generation and consumption power is not properly controlled, it can cause a collapse in the system. Particularly, this is more critical in MGs with low inertia such as 100% VSI-based microgrids. To overcome these instability issues in VSI-based MGs, this paper proposes a detailed system design, modeling, and analysis of the paralleled three-phase VSI connected to the variable load and the grid using a modified virtual inertia PID droop-control with a virtual impedance. This achieves a fast response to frequency and voltage deviations and ensures accurate power-sharing among the paralleled VSIs. The system is modeled in MATLAB/Simulink® with the proposed methodology and experimental results in hardware in the loop (HIL) testbench with low inertia MG validate the proposed schemes.