This study presents a comprehensive analysis of the impact that a supplementary damping controller of the permanent magnet synchronous generator (PMSG)-based wind turbine (WT) has on low-frequency oscillation (LFO) damping. A reduced mathematical model of an interarea system is first established. Then, an auxiliary damping controller is designed using the PMSG active power control loop, enabling the WT to actively support the interarea LFO mitigation. Based on this, the damping torque analysis (DTA) method is applied to explore the contribution of the PMSG-based WT with an auxiliary damping controller to LFO damping enhancement, whose analytical expressions of the damping torque coefficients reveal the impacts of the control parameters and the operation conditions on the system damping characteristics. It is evident that the installation location of the wind power plant (WPP) plays a leading role in determining whether the damping provided by the PMSG controller is positive or negative. Also, the contribution of damping from the PMSG can be improved by tuning the droop coefficient of the PMSG controller properly. The results indicate that the proposed damping control is always helpful in improving the system damping when the wind power penetration increases. Accordingly, analytical conclusions can serve as guidelines for the control design. Case studies of a two-area test system integrated with a PMSG-based wind farm have been conducted to verify the theoretical analysis.