Microgrid is considered as the future power systems due to the demand in the power supply and also due to its capability of integrating with the renewable energy sources. Based on the demand and location, the microgrid operates independently in an islanded mode by disconnecting from the power grid. A microgrid improves the efficiency of power consumption, along with the reliability of the power quality and power supply. The reliability of the microgrid is an important aspect to improve for the efficient power quality and availability of the electricity. This paper provides a review on reliability of microgrid considering various techniques and methods. The paper discusses about the background and concept of microgrid, effect of reliability in power systems, different scenarios of reliability in microgrids. Also, the challenges and solutions are elaborated from the implementation of various optimization techniques for the microgrid systems.