Abstract: The microgrid based on new energy has small inertia and weak damping,while virtual synchronous generator（VSG）is an effective means to enhance inertia and damping to improve the stability of micro-grid,but at the same time,it introduces the power angle oscillation problem similar to that of synchronous generator. This paper presents an adaptive control strategy to optimize VSG inertia and damping to improve small-signal and transient stability. Firstly,the control model of virtual synchronous generator is established,and the hyperbolic sine function（tanh）is introduced to optimize the inertia in the virtual inertia control. The correctness of the optimized inertia control is verified by the equal area rule analysis. The flexible switching transient damping and steady damping control links are introduced into the virtual damping,and the effectiveness of the optimized damping method is demonstrated by root locus analysis. According to the frequency domain characteristic index,the main pole method is used to design the control parameters.Finally,the effectiveness of the proposed optimization method to improve static stability and transient stability is verified by Simulink simulation.