A new privacy-preserving algorithm based on the Paillier cryptosystem including a new cooperative control strategy is proposed in this paper, which can resist the false data injection (FDI) attack based on the finite-time control theory and the data encryption strategy. Compared with the existing algorithms, the proposed privacy-preserving algorithm avoids the direct transmission of the ciphertext of frequency data in communication links while avoiding complex iterations and communications. It builds a secure data transmission environment that can ensure data security in the AC microgrid cyber-physical system (CPS). This algorithm provides effective protection for AC microgrid CPS in different cases of FDI attacks. At the same time, it can completely eliminate the adverse effects caused by the FDI attack. Finally, the effectiveness, security, and advantages of this algorithm are verified in the improved IEEE 34-node test microgrid system with six distributed generators (DGs) in different cases of FDI attacks.