This paper proposes to design and control of three-phase distribution static compensator (DSTATCOM) for mitigating power quality problems at the distribution level. The current related power quality issues such as excess reactive power, harmonics and unbalancing of load are taken into consideration. Control based on double second order generalized integrator synchronous reference frame (DSOGI-SRF) theory is developed for generating reference supply currents. Three phases voltage source converter (VSC) with self-support DC bus is used as DSTATCOM. Switching pulses for VSC are generated using hysteresis current control. This system is developed with MATLAB environment using SIMULINK and Sim Power System (SPS) tools.