The imbalance between the generated power and the load demand is the major factor that is usually responsible for frequency instability in power systems, most especially islanded microgrids. To determine the size of the loads that should be shed and their appropriate locations in the power system, to maintain the system frequency within the permissible limits, this paper presents an effective adaptive control scheme. In the proposed controller, a stepwise load-shedding approach is designed in the islanded MGs to regulate the grid frequency while providing the amount of power shortage. To this achieve, it locally measures the system parameters most especially voltage and frequency signals. Thereafter, a stepwise load-shedding will take place in locations where the highest voltage drop and frequency variation are experienced. The load-shedding step changes according to certain factors such as shedding speed, location and value, and the rate of frequency change. The proposed approach eliminates the adjustable loads to return the frequency back to the desired value. Simulation results of the proposed method under different practical scenarios, when compared with the conventional PID controller, provide considerable enhancement in the power system frequency stability. (C) 2016 Elsevier B.V. All rights reserved.