In this paper three leg Voltage source converter (VSC) based Hybrid Active Power filter (HAPF) is proposed for existing problems of harmonics, reactive power compensation, high total harmonic distortion (THD) and Power factor improvement for three phase non linear loads. In the system, a hybrid active power filters which is the combination of active filter and passive filter. The reference current has been generated by comparing load current, source current using fuzzy controller and pulses for switching VSC has been obtained by reference current generation. The main purpose is to get high quality power. The MATLAB was the simulation tool, used in the study, development, and performance evaluation of the Hybrid Active Power filter.