In this paper, an Active Power Filter (APF) is implemented using a dSPACE DS1104 processor to compensate harmonics and reactive power produced by nonlinear load. The reference source current is computed based on the measurement of harmonics in the supply voltage and load current. A hysteresis based current controller has been implemented in a DSP processor for injecting the compensating current into the power system, so that APF allows suppression of the harmonics and reactive power component of load current, resulting in a supply current that is purely sinusoidal. Simulation and experimental results of the proposed APF to meet the IEEE-519 standards are presented.