This paper investigates the impact of positive-feedback anti-islanding methods on the small-signal stability of grid-connected inverter-based distributed generation. The maximum power transfer capability of a distributed generator (DG) is analyzed. Sensitivity studies are conducted for DGs equipped with the Sandia frequency shift anti-islanding scheme. Factors such as positive-feed back gain, initial chopping fraction, local load level, and network line impedance are investigated. The maximum power transfer limit versus positive-feed back gain curve is proposed as an index for the stability analysis. The results show that the positive-feedback anti-islanding scheme does have the potential to destabilize the grid-connected DG system when the grid is weak or the DG size is large. A curve that relates the maximum stable DG power transfer level versus the islanding detection time is proposed to quantify the destabilizing effect of the positive-feed back -based anti-islanding schemes.