Cascaded-connected string converter is an effective way to directly interconnect distributed low-voltage dc sources into higher voltage ac grids. When this system is switched to islanding operation, an important task is to obtain decentralized power sharing among power cells according to the corresponding dc source power capacity, and at the same time, maintaining a good regulation of supply voltage quality to local critical loads. In this paper, a hierarchical control approach is proposed to simultaneously realize the abovementioned two tasks. First, the central controller at point of common coupling (PCC) is responsible for supply voltage magnitude and frequency deviation suppression and it also distributes the key control signals to all power cell local controllers with only low bandwidth communications. At the same time, a modified inverse power factor droop regulator with adjustable offset is adopted by each power cell. As the offset is relevant to the PCC load power factor and the state of charges of power cell backstage batteries, it can easily obtain decentralized proportional power sharing. The proposed system and the control strategy are compared with the conventional parallel converters-based system and the potential applications of the system are also given in this paper.