Increase in demand for electricity plays a vital role in adapting to global warming. The increase in distributed generation, such as wind, solar, fuel cells, and biomass, will create a significant impact on future power generation. In such cases, the microgrid and the distributed generator and its loads are a single block of the control system to incorporate all renewables. Microgrids can operate as island mode or grid-connected mode. The microgrid can introduce the reduction of the reversal of power in an alternating current (AC) or a direct current (DC) grid to meet challenges such as increased reliability locally, fewer losses in the feeder, high efficiency, and a better voltage profile. Different types of components that are associated with a hybrid AC/DC microgrid and its simulation modeling along with control mechanisms are discussed.