Environmental concerns, energy and economical-technical issues make modern power networks to use alternative approaches such as demand response (DR). The DR is an ability of system to contribute smart loads in dynamic regulation, continuously. This paper presents a new DR approach for frequency control of isolated microgrids. The proposed method is based on a generalized droop characteristic (GDC), changing controllable active and reactive loads through a set of special equations. To verify the control method, several scenarios are simulated in which the system frequency and voltage are studied. The simulation results are carried out in the presence of the proposed DR control loop in comparison with the conventional generation side controller. The results show proposed control methodology provides appropriate performance and improved stability.