A novel circuit configuration to compensate for the reactive power is proposed in this paper. This hybrid reactive power compensator includes an AC capacitor set serially connected to a small-capacity power converter. The AC capacitor set can avoid the damage caused by the power resonance and harmonic current injection after using this hybrid reactive power compensator. Because the AC capacitor set can effectively block the DC voltage generated from the power converter to the utility, only a two-arm structure without using the split DC capacitors is required for the power converter in the three-phase three-wire distribution power system. Consequently, the required number of power electronic devices for the power converter is reduced. A prototype is developed and tested to verify the performance of the proposed hybrid reactive powercompensator. The tested results show that the proposed hybrid reactive power compensator has the expected performance.