This paper aims to present a comparative simulation study of Shunt Active Power Filter (SAPF) compensation performance on a three-phase three-wire distribution system supplying a nonlinear load. The SAPF model is developed to generate compensating reference currents by instantaneous reactive power theory based hysteresis current controller. The simulation of the distribution system supplying a three-phase nonlinear load based on MATLAB/SIMULINK and PSCAD/ EMTDC software show the effect on compensating reactive power and harmonic components of the source current. Simulation results show that, MATLAB outperformed over PSCAD to accurately implement and validate the model providing more degrees of freedom and relatively better settings in real time. © 2011 IEEE.