Microgrids (MGs) can effectively integrate the high penetration distributed energy resources (DERs) for the energy and environmental crisis. Still, fluctuations in intermittent DERs may lead to severe frequency and voltage deviations or even the instability of islanded MGs. Secondary control has successfully compensated for the frequency and voltage deviations. Research on secondary control mainly focused on steady-state operating objectives, i.e., frequency and voltage recovery and power sharing. Still, improving the dynamic responses of secondary control is crucial for system-stable operation, especially in the presence of synchronous DERs. This is because these units can cause undesired oscillatory modes, leading to system instability. In addition, because of the line impedance effect, accurate reactive power sharing is usually ignored when voltage recovery is considered. This will lead to an overload of MGs. To improve the dynamics of secondary control while trading off voltage regulation and reactive power sharing, we propose a Lyapunov-Function (LF)–based distributed secondary control strategy. In the proposed LF-based control strategy, the frequency, voltage, and power information are introduced into feedback control based on the Lyapunov stability theorem. Therefore, the improved frequency and voltage deviations and accurate power sharing can be guaranteed when the Lyapunov function asymptotically attenuates to zero. The inherent conflict between voltage regulation and reactive power sharing is addressed by converging the average voltage to the rated reference. Besides, the improved dynamic performance of secondary control is achieved by considering global power variations, which are obtained by distribution-level phasor measurement units. Global power variations can establish control actions to dampen system oscillations and accelerate system restoration. Furthermore, the controller design method based on the Lyapunov stability theorem can naturally promise the stability of the proposed secondary frequency and voltage controllers. Numerical simulations on the IEEE 34-bus system validate that the proposed control strategy can ensure the significantly improved dynamic performance of secondary control while achieving steady-state operation objectives.