Steady increase in electricity consumption, fossil fuel depletion, higher erection times of conventional plants, etc., are encouraging the use of more and more onsite renewable energy. However, due to the dynamic changes in environmental factors as well as the customer load, renewable energy generation is facing issues with reliability and quality of the supply. As a solution to all these factors, renewable energy integrated cluster microgrids are being formed globally in urban communities. However, their effectiveness in generating quality power depends on the power electronic converters that are used as an integral part of the microgrids. Thus, this paper proposes the “Fuzzy Hysteresis Current Controller (FHCC)-based Inverter” for improving the power quality in renewable energy integrated cluster microgrids that are operated either in grid-connected or autonomous mode. Here, the inverter is controlled through a fuzzy logic-based hysteresis current control loop, thereby achieving superior performance. System modelling and simulations are done using MATLAB/Simulink®. The performance analysis of the proposed and conventional inverter configurations is done by computing various power quality indices, namely voltage characteristics (swell, sag, and imbalance), frequency characteristics (deviations), and total harmonic distortion. The results reveal that the proposed FHCC-based inverter achieves a better quality of power than the traditional ST-PWM-based multilevel inverter in terms of IEEE/IEC/EN global standards for renewable energy integrated cluster microgrids application.