Abstract: Along with rapid development of clean energy and relying on its flexible and efficient integration capability for distributed generation, the microgrid has become an important development direction of smart power grid. In the environment of electricity market, it is extremely important that how microgrid can well coordinate and optimize its internal and external resources to gain maximized economic benefit for its existence and development. To effectively promote economic and optimized operation of microgrid under the condition of electricity market, a bi-level economic dispatching optimization model for microgrid was proposed. In the upper level of the proposed model, following items such as making the microgrid participate the competition in the selling side of electricity market and the ancillary service market, drawing up the market trading plan for microgrid, optimizing the operation income of microgrid and so on were considered; in the lower level of the proposed model following items were considered: the optimized scheduling of distributed generations within the microgrid, coordinating the optimal allocation of various internal resources to make the total operation cost the lowest. It is verified by analysis results of computation example that by means of establishing bi-level optimization the microgrid can obtain better economic benefit under the competition environment of electricity market.