This paper presents the latest trends and challenges in renewable based distributed power generation, control, and islanding management in hybrid microgrid system (HMS). With evolution of distributed generation (DG), the power conversion, transmission and distribution losses have been reduced significantly in electrical system. Further, the reliability and security of the power system network have also been enhanced with reduced carbon emission to the environment. It is witnessed in recent years that the development and implementation of emerging DC grid system with the counterpart. In this paper, we have suggested and discussed the hybrid microgrid architecture with the combination of DC as well as existing AC microgrid. Further, different sources of DG are discussed and classified for HMS. The state of art for both AC and DC bus voltages in the HMS is presented. HMS has both AC and DC natured sources and load, therefore, the power electronic converters play crucial role to enhance the performance of the HMS.