In recent years, virtual synchronous generator (VSG) control algorithm has been widely studied in distributed grid-connected power inverters to deal with active and reactive power adjustment by simulating the operation principle of the actual synchronous generator. Nevertheless, once the current sensor fails, the grid-connected power inverter will lose its stability. To enhance the fault-tolerant operation ability of the grid-connected power inverter, a new inverter side current sensor-less model predictive control method based on sliding mode observer (SMO) is proposed. The stability of the SMO is analyzed by using the Lyapunov stability criterion. The gains of the SMO are then designed by analyzing their influences on the current and voltage observation based on the closed-loop transfer functions. Besides, to show the influences of the capacitance changes on the current observation, a detailed parameter sensitivity analysis is also carried out. Then, by using the estimated inductance current from the SMO, a current sensor-less model predictive control method is finally proposed. The main novelty of the proposed method is that both the output voltage of the inverter and the inverter side inductance are not required in the proposed SMO. So, the accuracy of current sensor-less control is improved. To verify the effectiveness of the proposed method, detailed experimental studies are carried out based on a Typhoon and PE-Expert 4 based experimental platform. uabc Capacitor voltage Vn The voltage vector Vdc DC voltage K1 Gain of the SMO iabc Grid-side current V The voltage on the inverter side ξ Quality factor K2 Gain of the SMO