Among the factors influencing power quality of microgrid, harmonic current brought by power electronic devices and load with considerable reactive power demand are the most significant. This paper introduces a combined system of Active Power Filter (APF) and Static Var Compensator (SVC) to improve power quality of microgrid. In the combined system, APF, installed at the outlet of the micro source inverter, mitigates harmonic current. Its current detection method is ip-iq, and tracking method is Deadbeat Control and Space Vector Pulse Width Modulation (SVPWM); SVC, which is set near the load of microgrid, comprising Thyristor Controlled Reactor (TCR) and Thyristor Switched Capacitor (TSC), supplies reactive power, relives voltage variation, and reduces power loss on the transmission lines. As for SVC, we adopt closed-loop control and use Proportional-Integral (PI) method to regulate the compensatory susceptance, and then find the corresponding trigger angle in a given table. APF and SVC, performing respectively, improve the power quality of microgrid together. Simulation results show the effectiveness of the combined system later in this paper.