Third harmonic (TH) current from salient-pole synchronous generator that return to its neutral via cable capacitance or other neutral grounding points in the network can cause the neutral earthing resistor (NER) to experience high temperature. Generator neutral earthing reactance (NERX) can be used to mitigate the TH current flowing in the neutral under normal condition. This paper aims to study the suitable design of NERX to be implemented in Universiti Teknologi Petronas (UTP) distribution system to reduce the TH current at the generator neutral. The model of UTP distribution system is developed using MATLAB Simulink in order to simulate the flow of TH current. NERX is then designed and implemented to the system to mitigate the magnitude of TH current. Various values of NERX are applied to the system as the neutral current and fault current are recorded and graphed. The application of 0.175 H NERX increased the TH neutral current in island mode and normal operation to 33.18 . However, the NERX causes the TH fault current to reduce to 44.33 under fault. For parallel mode, 78.27 of TH neutral current and also 42.91 of TH fault current are reduced under normal operation and fault respectively. © 2018 The Authors, published by EDP Sciences.