In recent years, since more and more diode rectifiers with smoothing dc capacitor are used in electronic equipments, household appliances and ac drives, harmonics generated by these loads have become a major issue. In addition, 3-phase 4-wire system is widely employed in distributing electric energy to several office building and manufacturing plants. This systems show excessive currents in the neutral. These neutral currents are fundamentally third harmonic, and their presence is tied to wiring failure, elevating of neutral potentials, transformer overheating, etc. In response to the concerns, this paper proposes a series active power filter scheme based on direct compensating voltage extraction method and the advantage of this control algorithm is direct extraction of compensation voltage reference without multiplying gain. Therefore, the calculation of the compensation voltage reference will becom much simpler than other control algorithm. To verify the effectiveness of the proposed algorithm, a prototype active power filter is built and some experiments are carried out.