Implementation of a cost-effective practical shunt active power filter (SAPF) depends on microcontroller was the key for developing a simplified control strategy that modifies a previously published one which named on-line compensating method [1]. The objective is to eliminate harmonics and compensate reactive power generated by non-linear loads to improve the power quality. The SAPF is realized using three phase voltage source inverter (VSI) with dc-bus capacitor and the proposed control algorithm is elaborated using a low cost (Intel 80C196KC) microcontroller. The simulation and experimental results are presented to prove the efficient performance of the SAPF under the proposed controller.