Presently a lot of work is being carried out in held of distributed generation. Many distributed generation systems are being designed and connected to the electric grid. At a time when the predictable sources of energy such as coal, oil, etc are fast vanishing, a study of distributed generation systems and building of such systems using renewable energy sources becomes very main. When a DG source is being connected to the grid, there are many constraints to be met one of which is the harmonic content of the current being injected into the grid. The current being injected should have harmonic content compliant to standards such as IEEE This project deals mainly with building the hardware for a grid-interactive inverter. This means that a proper scheme should be present in the system to limit the harmonic current inoculation into grid. The hardware is customized to be used for a PV panels based distributed generation system. In this work, Liters are designed to eliminate only the higher-order harmonics. This is due to the reason that liters would be less bulky and cheap when they are designed to attenuate only the higher-order harmonics. In order to mitigate the lower order harmonics, an adaptive selective harmonic elimination technique (AHE) is used. The validity of the AHE technique is varied in hardware. Overall, the project work involves the building of the inverter hardware, the Liters, transformer and design and implementation of closed-loop control along with AHE scheme.