ABSTRACT This research deals with design of three-phase hybrid active power filter to reduce the current distortions caused by non-linear loads. The Instantaneous Active and Reactive Power Method (p-q) is used to perform the identification of disturbing currents. The p-q algorithm generates the reference compensation current signal, while this generated reference compensation current signal is exactly followed by the output current of the voltage source converter. Fuzzy logic controller for three-phase hybrid active power filter is used to generate the switching signals in order to control the output currents of voltage source converter. Simulation results showed that the hybrid active power filter can compensate the harmonic currents effectively and improve power quality. Keywords Hybrid Active Filter, p-q theorem, Total Harmonic Distortion, Fuzzy Logic Controller. 1. INTRODUCTION Nowadays industries prefer to use power electronics based devices due to their effectiveness. Though these power electronics based devices are advantageous to the electronics and electrical industry, these devices generate and inject the harmonics in the power industry. These harmonic are known as electrical disturbance which is the main cause of the power quality associated harms. The industrial process is affected by the power quality problems. Therefore for improving the quality of the power supply this harmonic distortion should be decreased with the help of the filters. In the literature, various topologies of active power filters (APFs) have been presented for mitigation of harmonics [1-3]. The APF topologies are not cost-effective for the application of high power because of their high rating and very high switching frequency of pulse width modulator (PWM) converter. Thus LC passive filters (PFs) are used for harmonic filtration of such large nonlinear loads. Low cost and high reliability is the main advantage of PFs. However, PFs suffer from some shortcomings for example, the performance of these filters is affected due to the varying impedance of the system and with the utility system the series and parallel resonances may be created, which cause current harmonics increase in the supply [4-5]. As discussed above both APFs and PFs suffer from a number of disadvantages. Therefore another solution of harmonic mitigation, called hybrid active power filter (HAPF), has been introduced. Hybrid active power filters (HAPF) provide the combined advantages of APF and PPF and eliminate their disadvantages. These topologies are cost effective solutions of the high-power power quality problems with well filtering performance. This research paper is restricted to the (HAPF). The (HAPF) is specially designed to compensate the reactive power and decrease the harmonic currents occurred on the side of load from the grid, by injecting the current having same magnitude but opposite in the phase direction of the harmonic current [6]. In the literature a number of methods have been emphasized for identification of reference current [7-12]. For identification of disturbing current the instantaneous reactive power method has been used in this paper. For controlling the output currents of the converter, to follow the reference currents, hysteresis current controller have been used in [13-15].The implementation of hysteresis current controller is simple and its performance is also excellent. However, this controller suffers from drawbacks. Its main drawback is to generate the variable switching frequency. Therefore reliability and efficiency of hybrid active power filter is affected [16]. To avoid these drawbacks, this paper present the fuzzy logic based current controller to control the output currents of the voltage source converter. Although to control the output current of converter based on fuzzy based is not new [17-18], this approach with 15 rules has not yet being applied to proposed filter.