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Inverter-based distributed generators (DGs) have been customarily used for voltage unbalance (VU) mitigation in microgrids. The sole dependency on DGs for VU mitigation may not be justified, particularly in islanded microgrids. Demand side management can be a potential candidate for VU mitigation in microgrids. Therefore, this paper presents a new VU mitigation scheme for an islanded microgrid by coordinating photovoltaic (PV) grid-tied inverters, and thermostatically controlled loads (TCLs). A negative sequence compensation loop working in parallel with a positive sequence compensation loop is designed for PV inverters for VU mitigation. Also, a voltage dependent model of TCLs, unlike the conventional one, along with the control strategy for VU mitigation is presented. The proposed control of TCLs not only minimizes VU, and hence, increases the dynamic reactive power reserve of the inverter based DGs …