Recent advances in power electronics have lead to the wide spread adoption of advanced power supplies and energy efficient devices. This has lead to increased levels of harmonic currents in power systems, degrading the performance of electrical machinery and interfering with telecommunication services. Active filters provide a solution to these problems by compensating for the distorted currents drawn by non-linear loads. Optimal methods for controlling these active filters have been determined by computer simulation and experimental implementation. Methods used for isolating the harmonic content of an unbalanced three phase load current were compared by computer simulations. A technique based on the Fast Fourier Transform (FFT) was developed as part of this work and shown to perform favourably. Notch Filtering, Sinusoidal Subtraction, Instantaneous Reactive Power Theory, Synchronous Reference Frame and Fast Fourier Transform methods were simulated. The methods shown to be suitable for compensation of three phase unbalanced loads were implemented in a Digital Signal Processor to evaluate true performance. These methods were Notch Filtering, Sinusoidal Subtraction, Fast Fourier Transform, and a High Pass Filter based method. A completely digital hysteresis current controller for a three phase active filter inverter has been developed and implemented with a Field Programmable Gate Array. This controller interfaces directly to a digital signal processor and is resistant to electromagnetic interference. Results from the experimental hardware verified that the active filter model used for simulation is accurate, and may be used for further development of harmonic isolation methods. A technique using notch filtering gives the best performance for steady loads, with the FFT based technique giving the most flexible operation for a range of load current characteristics. Novel use of the FFT based harmonic isolation technique allows selective cancellation of individual harmonics, with particular application to multiple shunt filters connected in parallel.