This paper presents small-signal modeling, analysis and closed-loop controller design guidelines for a distributed battery energy storage system with energy sharing controller which has recently been presented in the literature in order to achieve cell balancing with high cell balancing speed and energy efficiency. The derived small signal models provide deeper insight into the dynamics of the energy sharing controlled battery system under different operating modes, including discharge mode, constant current charging mode and constant voltage charging mode. Based on the derived small signal models, closed-loop controller design guidelines are provided based on rule-of-thumb frequency-domain design criteria. The small signal models and designed controllers are validated by MATLAB®/SIMULINK simulation and experimental prototype results.