A Diesel Engine Generator (DEG) is the most widely used choice for primary or emergency energy sources on islands, in remote areas, and worldwide as a reliable source. Conventionally, diesel generators operate at a constant speed and work at a particular minimum load. Constant speed operation is intended to keep the system voltage frequency stable. However, this can reduce generator efficiency when load demand is low. Operating a variable speed to the diesel generator can be used to reduce the fuel consumption (inefficiency) of the generator. The choice of PMSG as a generator in the DEG system is made because PMSG has several advantages. In the DEG control method, the most popular is PID control, but it isn't easy to achieve better performance. Based on the results from the related research, fuzzy logic-based control is an effective method. This study presents the optimal control modeling and simulation of DEG on variable speed operation using Permanent Magnet Synchronous Generator (PMSG) with Fuzzy-based control to achieve better system performance based on load changes. The result showed that operating the variable speed could increase the efficiency of fuel consumption by up to 21.41%. In addition, fuzzy control can achieve a faster settling time and minor overshoot than the PI control.