In order to overcome the disadvantage of wide bandwidth control of harmonics in the traditional active power filter and the inverter protection in the series active power filter based on fundamental magnetic flux compensation，a novel shunt active power filter is proposed.It is characterized by parallel topology and single frequency control.The power quality controller consists of a transformer with low leakage reactance and a voltage source inverter.The primary winding of the transformer is connected in parallel with the harmonic source and utility grid，the primary fundamental voltage is detected and functions as the reference signal.The voltage source inverter is applied to track the reference signal to yield a controllable fundamental voltage source，which is applied across the secondary winding of the transformer.The transformer appears as a variable reactor to the fundamental wave to compensate for reactive power，while appearing as a leakage impedance to the harmonic so that it flows through the primary winding.The novel shunt power quality controller has the advantages of simple principle and structure，single frequency voltage control，and easy fault protection strategy.The validity of the theory is proved by experimental results.