This paper analyses the stability of paralleled voltage source converters in AC distributed power systems. An impedance-based stability analysis method is presented based on the Nyquist criterion for multiloop system. Instead of deriving the impedance ratio as usual, the system stability is assessed based on a series of Nyquist diagrams drawn for the terminal impedance of each converter. Thus, the effect of the right half-plane zeros of terminal impedances in the derivation of impedance ratio for paralleled source-source converters is avoided. The interaction between the terminal impedance of converter and the passive network can also be predicted by the Nyquist diagrams. This method is applied to evaluate the current and voltage controller interactions of converters in both grid-connected and islanded operations. Simulations and experimental results verify the effectiveness of theoretical analysis.