This paper proposes a photovoltaic (PV) integrated shunt active power filter (SAPF) for reactive power compensation, uneven loading and compensation of harmonic current. The control of SAPF is implemented by using adaptive based current estimation algorithm to maintain power factor near to unity and source current sinusoidal at source side. The weights are calculated online by recursive least mean square algorithm once the three-phase load current is detected. Secondly, the unit vector templates (UVT) are multiplied with these weights and thus the load current with fundamental active component is derived. PV system enhanced by Maximum Power Point Tracking (MPPT) plays the role of maintaining the dc link voltage constant. Finally, a current control scheme based on hysteresis is used for converter switching and thus the source current to follow reference current precisely. The superiority of the proposed method of compensation of harmonic current and reactive power using SAPF with Recursive Least Mean Square (RLS) algorithm is proved by the simulation results based on MATLAB/SIMULINK. © 2020 ASTES Publishers. All rights reserved.