Sustainable energy-based generation systems, such as photovoltaic and wind turbine generation systems, normally adopt inverters to connect to the grid. These power electronic interfaces possess the characteristics of small inertia and small output impedance, which create difficulties to stabilize the voltage and frequency of a distributed power source. To deal with this problem, a Virtual Synchronous Generator (VSG)-based inverter control method is presented in this paper by introducing virtual inertia and damping coefficient into the control loop to emulate the dynamic behavior of a traditional synchronous generator. Based on this VSG control method, a three-layer hierarchical control scheme is further proposed to increase the control accuracy of the voltage and frequency in a VSG-based distributed generation system with parallel inverters. The principle of the VSG control method, the system stability analysis, the design process of the hierarchical control structure, and the frequency/voltage secondary regulation processes are all specified in this paper. Finally, some numerical simulations are carried out and the effectiveness of proposed control scheme is verified by the simulation results analysis.