In this paper, a miniaturization method is proposed for developing micro distributed generation for a micro smart grid simulator. The micro smart grid simulator is a fault simulator that was built to test and verify the new operation control algorithms for smart grids in the laboratory and has a size downscaled to one-thousandth of that of an actual smart grid. The micro distributed generation was designed in a multi-layered structure (dimension: 13 × 20 cm2), in which each function is implemented in several layers, to satisfy the size requirements. Next, the grid synchronization and PQ control algorithms required for the distributed generation were developed. A three-phase 19 V power system was built, and a 19 V–7.5 W three-phase micro distributed generation was realized through experimental verification. In addition, by verifying the effectiveness through grid synchronization and 7.5 W PQ control experiments, it was confirmed that the micro distributed generation based on the proposed miniaturization method can be implemented in a micro smart grid simulator.