High operational costs, environmental concerns and fuel handling challenges in diesel-based remote off-grid systems have prompted the application of alternative sources of energy and energy storage systems. Based on these drives, operators of isolated microgrids have been seeking out these alternatives. In re-sponse, a Canadian utility is investigating the application of utility scale photovoltaic(PV) generation and Battery Energy Storage Systems(BESS) to supplement existing Diesel Generators(DiGs) in an off-grid community. This paper presents the design, operation, and dispatch strategy for this hybrid PV/BESS/DiG isolated microgrid. A Northern remote off-grid community in Canada is used as a case study. Custom models to accurately represent all components of the hybrid microgrid in the Northern climate are developed first. Then, optimization algorithm that minimizes the Annual System Cost(ASC) are developed to size the PV and BESS. The algorithm incorporates the cost of the BESS, the rated power limits of PV and BESS, and the prime rating capability of DiGs. Finally, the paper proposes to optimally site the BESS by minimizing the total system loss and optimizing the voltage profile along the feeders. The study reports both cost saving and power quality improvement with the installation of PV and BESS, and presents guidelines on how to generalize these results to other hy-brid isolated microgrids.