As the penetration of distributed power sources in the power grid is getting higher and higher, the adverse effects are also increasing. It is necessary to adopt control technology to make the distributed power source participate in the power regulation of the power system. In this paper, a multifunctional high-power grid source simulator system is presented. For wider control bandwidth and better performance, a high-power, back-to-back converter and an auxiliary lower-power, back-to-back converter connected in cascade mode topology is proposed in this paper. The basic principle and implementation method of virtual synchronous generator (VSG) in the high-power, back-to-back converter are described to reflect the same power frequency characteristics and voltage regulation characteristics as synchronous generators. Amplitude closed-loop control is proposed to realize zero steady-state error in the lower-power, back-to-back converter, also with line impedance imitation. Meanwhile, a constant-impedance, constant-current, and constant-power (ZIP) load model is used to emulate static load in the grid simulator system. At last, a set of experimental results for a 2 MW grid simulator system is provided to verify the effectiveness and validity of the proposed approach.