This paper presents the design of a disturbance observer-based controller that regulates the output voltage of three-phase four-leg voltage source inverters (VSIs) deployed for grid-forming operation in Renewable Energy-based Distributed Generation (REDG) Systems. The primary objective of the controller is to provide a symmetric and sinusoidal voltage at the output of the VSI when supplying highly unbalanced and nonlinear loads. The controller employs the feedback linearization (FL) technique and incorporates a disturbance observer (DO) to address a range of disturbances that include oscillations resulting from unbalanced loads, harmonics generated by nonlinear loads, and non-oscillatory disturbances. Notably, the controller adopts a direct control scheme without the need for nested current control loops and does not use any transformation frames. Simulation studies and experimental investigations were conducted to assess the controller’s performance under various load conditions, including both linear and nonlinear types, as well as load transients. The findings demonstrate the controller’s capability to accurately track references while complying with the IEEE power quality standards for the tested conditions.