In this paper, we proposed a frequency-sensor-based controller (FSBC) of the battery storage system (BSS) to regulate the frequency variation of an island microgrid with a very high penetration level of renewable energy sources. We selected the Kinmen Island microgrid for our study. Grid data including the network topology, system load profile, photovoltaic power generation (PVPG), wind power generation (WPG), and load shedding strategy are collected and analyzed. Then, the mathematical models of the governor and exciter of diesel generators are confirmed and derived. The BSS with an FSBC is designed and applied to enhance the operation of the microgrid. After that, the transient stability analysis is carried out by considering various operation scenarios and contingency events, such as the tripping of diesel and wind generators or the ramping change in PVPG power output. Moreover, the FSBC of the BSS with different rating capacities is included in the simulation process to improve the frequency variation of the microgrid by regulating its active power output rapidly. It is found that the proposed FSBC of the BSS is very effective in enhancing the operation of the grid and preventing load shedding.