Voltage fluctuations resulting from variable output power of renewable energy sources are strictly challenging power quality in distributed-generation systems. This paper presents a control method for distributed static synchronous compensator (D-STATCOM) to alleviate variation of both positive- and negative-sequence voltages. The D-STATCOM simultaneously operates as fundamental positive-sequence admittance and fundamental negative-sequence conductance to restore the positive-sequence voltage to the nominal value as well as reduce the negative-sequence voltage to an allowable level. Both admittance and conductance are dynamically tuned to improve voltage-regulation performances in response to load changes and power variation of renewable sources. A proportional-resonant current regulator with selectively harmonic compensation is realized to control the fundamental current of the D-STATCOM as well as reduce the harmonic current, which could be an advantage in practical applications due to high voltage distortion in low-voltage microgrids. Voltage-regulation performances are discussed for different D-STATCOM locations as well as different D-STATCOM currents. Computer simulations and laboratory tests validate effectiveness.