In this paper a compensating system using four-leg shunt active power filter (SAPF) in a three-phase four-wire distribution network which will be able to mitigate harmonics, absorb or generate reactive power, and improve the power factor on supply side, is presented. Two control approaches based on p-q theory and load current detection using phase locked loop (PLL) are proposed. To validate the compensation performance of SAPF the distribution network with nonlinear loads is simulated using MATLAB/Simulink software. Simulation results have proved and validated the performance of SAPF minimizing the total harmonics distortion (THD) and neutral current. ©2010 IEEE.