Abstract: System parameters play a significant role in the stability and dynamic characteristics of the microgrid. The stability analysis of droop control in the microgrid is proposed based on small-signal model to study the impact of system parameter of microgrid on the stability and dynamic characteristics of droop control in this paper. By using of the proposed method, the small-signal model is established at the point of the steady state, the small-signal model of droop control built by root locus method is analyzed. Through plotting the latent root location of each system parameter (such as line impedance value, droop coefficient of active power, filter time constant, etc.) with different values, the impact of its value on system stability is judged. The analysis results indicate that the parameters obtained by this model can meet the requirement of the stability and the dynamic response of the system, and provide a directional guidance for designing system parameters.