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Distributed generators are more expected with the capability to continue supporting power to local critical loads in both intended and unintended islanding conditions, in addition to its house‐keeping functions of grid‐connected condition. With this purpose, this paper proposes a control strategy of single‐phase grid‐connected inverter with both decoupled power control capability for grid‐connected mode and load voltage regulation capability for standalone mode. It also enables automatic voltage regulation on point of common coupling, which enables seamless transfer after islanding occurrence. An impedance model is disclosed to analyze the operation mechanism during transient state, with further investigations on both the effect of system parameters in different modes and the system operating features. Simulation and experimental results are provided to evaluate its effectiveness.

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