Generation of microwave signals by optical heterodyning has been an active area of research in the field of Microwave Photonics. Though this approach offers great flexibility in choosing the microwave frequency, issues related to frequency stability and phase noise performance are inherent to it. The effect of laser phase noise on heterodyned output is mathematically analyzed, simulated and practically demonstrated. Design of hardware-efficient Optical Phase Locked Loop (OPLL) that overcomes the issues of phase noise and frequency instability is proposed. Frequency stability and phase noise tracking achieved by the proposed OPLL is demonstrated experimentally. Highly stable microwave signals, exhibiting phase noise as low as −105 dBc/Hz at 10 KHz offset (limited by the phase noise of the reference source used in the experiment), are successfully generated by the proposed approach. The generated microwave signals have been shown to be devoid of spurious components and harmonics.