A stability-enhancement inverter controller is proposed and its impact on the small-signal stability of distribution systems with multiple photovoltaic-based distributed generators (PV-DGs) is investigated. In specific, the random variation of the power output from multiple PV-DGs is considered. Being different from a single grid-connected PV system, the spatial correlation between PV-DGs and the system stability sensitivity with respect to different PV-DGs among the feeder are also taken into account. The small-signal stability analysis of the distribution system is performed using a probabilistic approach. As the PV-DG power output is randomly variable, the distribution system is not operating in a fixed mode. Consequently, the critical eigenvalues of the system move randomly. Through the Gram–Charlier expansion method, the probability density function of the critical eigenvalues of the distribution system is approximated and the probabilities of the system stability and instability are calculated. Taking the probability of the system instability as the performance metric, the effects of different system parameter settings of the grid-interfacing inverter controller on the distribution system are analyzed. The verification of the analytical results is carried out through Monte-Carlo time-domain simulations of the distribution system. The results suggest several methods to reduce the probability of system instability, including installation of the proposed inverter controller, choosing a large substation capacitor and/or choosing large capacity load and substation transformers.