This paper analyzes the low frequency stability chal-lenges that exist in a generic DC microgrid system. The conditions for system stability are derived from fundamental principles. A capacitive energy storage system based active voltage stabilizer, that handles the power fluctuations within the system during transient conditions, is proposed to stabilize the DC microgrid. The functionality of the active stabilizer, based on a bidirectional DC-DC converter, is elucidated and a suitable control strategy is proposed. The proposed active stabilizer and its associated control system involves only local voltage sensing and does not alter the generic DC microgrid structure. The proposed approach is validated through analytical models and circuit simulations. A dual active bridge (DAB) converter based active stabilizer is implemented and hardware based experimental results from a laboratory test-bench are provided to validate functionality and effectiveness of the proposed approach. © 2019 IEEE.