The objective of micro grid (MG) is to generate, regulate and distribute the electricity to the utility grid. Any faults occur in the MG can cause deviations on the voltage, frequency and voltage sag/swell, which affects the power quality. In order to overcome these issues in this paper we proposed to design an adaptive model predictive control (MPC)-based robust extended Kalman filter (REKF) with improved particle swarm optimised selective harmonic elimination (IPSO-SHE) control system. This fetches the importance of power quality improvement. The utilisation of adaptive MPC with robust EKF express the harmonic signatures produced in the system which can be used to detect islanding. An IPSO-SHE is finally employed to reduce the harmonics which significantly improves the quality of power delivered to the load. Our proposed control system has been implemented in the working platform of MATLAB/Simulink and tested with certain load conditions. The simulation results of the proposed control system and comparison with existing control systems shows the significance of the proposed work.