Electric power quality in power transmission/distribution systems has considerably been deteriorated with the increase in the capacity of distributed generators (DGs). It is because inverters, connecting DGs to conventional power grids, tend to generate harmonic current and voltage. For harmonic mitigation, a large amount of research has been done on passive and active filters, which have been operating successfully in many countries. This paper, therefore, presents how to adopt the filters to an inverter-based DG, with considering a system consisting of both inverter-based DG and harmonic filters. In particular, this paper describes the simulation results using the PSCAD/EMTDC: firstly, the relationship between total harmonic distortion(THD) of current and output power of DG: secondly, the harmonic mitigation ability of passive and active filters. The system, furthermore, is obliged to satisfy the regulations made by Korean Electric Power Corporation(KEPCO). In the regulations, power factor should be maintained between 0.9 and 1 in a grid-connected mode. Thus, this paper suggests two methods for the system to control its power factor. First, the inverter of DG should control power factor rather than an active filter because it brings dramatic decrease in the capacity of the active filter. Second, DG should absorb reactive power only in the range of low output power in order to prevent useless capacity increase of the inverter. This method is expected to result in the variable power factor of the system according to its output power.