The use of a permanent magnet AC generator (PMACG) with a salient-pole rotor design combined with an appropriate power converter has recently been shown to be an attractive practical approach for implementing small power systems. Although a classical approach to realizing voltage regulation may be developed on the basis of reactive power control in power systems, it presents special challenges for variable-frequency operation, made more difficult by the presence of lightly-damped machine dynamics. This paper presents a simple and effective means for regulating the terminal voltage of the generator by controlling the DC voltage of a stator-connected voltage-source inverter. The paper presents a dynamic model that illustrates the source of lightlydamped behavior, followed by the introduction of power derivative equivalent feedback into the control system to obtain excellent performance. Computer simulations and experimental results are presented to demonstrate the effectiveness of this control approach.