As the control technology of microgrid has been relatively mature nowadays, scholars begin to carry research on the economic operation of micrgrid. To achieve a win-win situation on both generation side and customer side, a multi-objective economic dispatch model of islanded microgrid based on demand response is proposed. The model introduces demand response under the Time-of-use rate mechanism, and the consumers’ profit objectives consisting of consumption utility function and consumption fee function is constructed. Meanwhile, the generation cost objectives is also constructed. Based on the above objectives, the minimization of generation cost is achieved by adjusting the incremental cost of Micro-turbines to the same, while maximize the consumers’ profit by adjust the optimal participant amount of flexible load. To testify the feasibility of the proposed model, a simulation platform is established to evaluate the performance of the model with demand response. The results prove that the proposed economic dispatch model can maximize the consumers’ profit while minimizing the generation cost. The consumers’ profit with DR is improved by 104% under Time-of-use rate mechanism.