This paper presents a theoretical study with experimental validation of a circulating-current suppression method for parallel operation of three-phase voltage-source inverters (VSI), which may be suitable for modular parallel uninterruptible power supply systems or hybrid ac/dc microgrid applications. The basic concept of the proposed circulating-current suppression method is to modify the original current references by using the current difference among the parallel inverters. In the proposed approach, both cross circulating current and zero-sequence circulating current are considered, and are added into the conventional droop plus virtual impedance control. In the control architecture, the reference voltages of the inverters are generated by the primary control loop, which consists of a droop control and a virtual impedance. The secondary control is used to compensate the voltage drop on the virtual impedance. Furthermore, a circulating-current control loop is added to improve the average current-sharing performance among parallel VSIs. Experimental results are presented to show the effectiveness of the proposed control method to suppress both cross and zero-sequence circulating currents.