With the rapid development of renewable energy, a large number of power electronic devices are connected to the power grid, leading to a gradual decrease in the reliability of the grid. Virtual synchronous generator can simulate the inertia support provided by synchronous generators to the power grid and has great potential in the new power system. This paper presents a small‐signal modeling of VSG using the state‐space method and verifies the correctness and effectiveness of the method through simulation experiments. Participation factor analysis was utilized to establish the relationship between the VSG state variables and system oscillation modes.