This paper presents an analysis of the frequency control and stability of the ship electric power system emulator of the School of Naval Architecture and Marine Engineering of NTUA. The emulator is an AC three-phase microgrid, comprising Generation, Distribution, Consumption, Protection and Supervising Monitoring-Control sub-systems. The generation system consists of (three) small AC synchronous generators (5 to 6 kVA each), while its loads are a passive RL load and a three-phase induction motor. As the generators are of low power, they produce Low Voltage (400 V), so no transformers are used in the system. The system is an electric island as its frequency and voltage are defined by its synchronous generators. Each generator output voltage is regulated by its Automatic Voltage Regulator. The generator rotors are driven by small induction motors, which are in turn fed by the local utility via power electronic converters. Therefore, each induction motor emulates the prime mover for each generator which results to a system with uncommon characteristics as the system frequency is equal to the induction motor rotor frequency, i.e. slightly lower than the frequency of the voltage applied to the stator of each motor, assuming normal operation (i.e. the generators supply the load, thus the motors are loaded and their slip is non-zero). In order to analyze the frequency control of the system and its stability, a MATLAB/Simulink model has been developed. First, the primary frequency control is analyzed in this paper and it is shown that the well-known speed-torque characteristic of the induction motor defines the droop of an emulated governor. Then, options for the secondary frequency control are simulated and discussed. It is shown that sharing of the load can be performed by modifying the frequency of the voltage fed to each motor. Finally, the system large-disturbance stability of the system is analyzed with simulations of faults at the island system, as well as at the motors. In the latter case, the voltage stability of the induction motors affects the frequency stability of the island system.