This paper presents an agent based Particle Swarm Optimization (PSO) for secondary load frequency controller using software-in-the-loop (SIL) environment. Real-time digital simulator (RTDS) is used for modelling the power system, while agent based PSO LFC algorithm is developed in JAVA for communicating with resource agents and determines the scenario to stabilize the frequency and voltage after the system enters into the islanding operation mode. The proposed algorithm is based on the formulation of an optimization problem using agent based PSO. The results will significantly help in stabilizing the frequency and the voltage of the distribution grid. The modified 3 machine 9 bus system is employed to illustrate the performance of the proposed approach via RTDS to verify its practical efficacy. Case studies are presented with respect to different operating conditions. Also, it can be used for validating LFC performance both in real-time operation and in power system planning for future renewable energy resource connections.