Microgrid increases the reliability and quality of supply of industrial and commercial buildings. The operation in islanding mode is a challenging issue due to the limited energy available and the lack of a main grid for synchronizing purposes. This paper presents both the design of a small-scale industrial microgrid and a hierarchical control strategy for islanding mode operation. The control scheme consists of primary and secondary layers to provide good power sharing among generators and elimination of voltage and frequency deviations in steady state, respectively. In addition, the control strategy mitigates undesired circulating currents and reduces power losses. Selected simulation results are included to verify the system performance.