The invention relates to a converter based on a virtual synchronous generator and a control method thereof. When a VSG function module is cut in, three-phase stator current outputted by the VSG function module is used as an instruction value of a converter current inner ring, a power grid voltage phase angle of power grid voltage through a phase-locked loop is used as a phase angle instruction value of the converter current inner ring, and through power grid voltage directional vector control, PWM waves are generated for control. On the basis of reserving the characteristics of accurate and flexible current control, stable frequency and the like of the conventional converter, the converter has a voltage source output characteristic similar to that of a synchronous generator. The VSG function of the converter can be input and cut out seamlessly, the switching is simple, and the method is particularly suitable for multifunctional online switching of the converter with the VSG function and power grid fault ride through control.