Coordinated control of distributed energy resources (DER) is essential for the operation of islanded microgrids (MGs). Conventionally, such coordination is achieved by drooping the frequency of the reference voltage versus active (or reactive) power. The conventional droop method ensures synchronized operation and even power sharing without any communication link. However, that method produces unwanted frequency fluctuations, which degrade the power quality. In order to improve the power quality of islanded MGs, a novel decentralized control method is proposed in this paper. In this method, GPS timing technology is utilized to synchronize the DERs to a common reference frame, rotating at nominal frequency. In addition, an adaptive Q-f droop controller is introduced as a backup to ensure stable operation during GPS signal interruptions. In the context of the common reference frame, even sharing of active (id) and reactive (iq) components of current are achieved based on vd-id and vq-iq droop characteristics. The method has been tested on laboratory scale MG. Experimental results demonstrate the efficacy of the proposed method in terms of dynamics, power quality and robustness with respect to GPS interruptions.