This paper proposes a combined adaptive virtual Inertia and adaptive damping control of a virtual synchronous generator (AID-VSG) to improve the dynamic frequency response of microgrids. In the proposed control scheme, the VSG’s virtual inertia and damping coefficients adapt themselves during the transients to, respectively, reduce frequency deviations and increase the oscillations’ damping. In addition, as an important feature, the proposed AID-VSG is suitable for distributed control scheme applications and is designed to not rely on phase-locked loop (PLL) measurements, which avoids PLL stability issues on weak grids. The control parameters of the proposed AID-VSG are tuned by the particle swarm optimization (PSO) algorithm to minimize the overshoot and settling time of the microgrid’s frequency during an islanding event. The AID-VSG is validated by a comparative analysis with three existing VSG control schemes, also tuned by the stated optimization algorithm. The performance of each compared VSG strategy is evaluated through the simulation of a set of 10,000 initial conditions, using the islanded microgrid’s nonlinear model. The best response among the VSG strategies was achieved by the proposed AID-VSG control for both the optimization problem and the set of initial conditions’ simulations.