Controlling voltage, frequency, and current in an islanded microgrid is a challenging problem because the distributed generation sources, stochastic and intermittent in nature, are not connected to the main electricity network to provide stable and clean energy. Therefore, the design of a robust controller to control the output parameters of the islanded microgrid and suppress load variations and disturbances is essential. In this paper, a hysteresis controller is proposed and designed to control the output voltage of an islanded AC microgrid and an improved sliding mode controller (SMC) based on adaptive control principle is designed to control the current of the microgrid. The current controller consists of two parts: An adaptation part, which aims to eliminate disturbances and system uncertainties, and a second part, which aims to deal with the tracking problem of the system under parameter-varying topologies. The adaptation strategy has the advantage of solving the gain tuning problem and chattering reduction. It also requires limited information about disturbance and uncertainties of the system. To validate the proposed control methodology and show its effectiveness, a case study of a simulated islanded microgrid is presented. The results show that the proposed controllers can effectively control the current and voltage underload changes and increase the stability and resilience of the microgrid. The results also reveal that the performance of the proposed controller in terms of total harmonic distortion (THD) and dynamic response overcome the performance of conventional controller by a 4× reduction in THD and 40–200× reduction in settling time.