This research investigates application issues of the active power filter to three-phase three-wire systems, with unbalanced, distorted loads where the line impedance gives rise to voltage distortion at the point of common coupling. Five shunt active power filters are investigated: two-level, wye connected cascaded three and five level, and diode-clamped three and five level. Capabilities of the different shunt active power filter topologies to mitigate voltage/current distortion, compensate reactive power, and balance real power from the source are investigated. Results indicate that neutral point clamped multilevel inverters have advantages over wye cascaded multilevel inverters when operating under asymmetrical load conditions.