A Microgrid (MG) Energy Management System (EMS) is a vital supervisory control to make decisions regarding the best use of the electric power generation resources and storage devices within this MG. This paper presents an operational architecture for Real Time Operation (RTO) of an islanded MG. This architecture considers two different parts including Central Control Unit (CCU) and MG Testbed. CCU implements an EMS based on Local Energy Market (LEM) to control a MG. In order to reach this objective, this unit executes Day Ahead Scheduling (DAS) and Real Time Scheduling (RTS). Regarding DAS, a Modified Conventional EMS (MCEMS) based on LEM (MCEMS-LEM) algorithm has been proposed to find out hourly power set-points of Distributed Energy Resources (DERs) and customers. LEM is also presented in MCEMS-LEM to obtain the best purchasing price in Day-Ahead Market (DAM), as well as to maximize the utilization of existing DER. With regard to RTS, it must update and feedback the power set-points of DER by considering the results of DAS. The presented architecture is flexible and could be used for different configurations of MGs also in different scenarios. Simulations and experimental evaluations have been carried out using real data to test the performance and accuracy of the MG testbed. This paper aims to operate the MG in islanded mode, ensuring uninterruptable power supply services and reducing the global cost of generated power. Results demonstrate the effectiveness of the proposed algorithm and show a reduction in the generated power cost by almost 8.5%. (C) 2013 Elsevier Ltd. All rights reserved.