This paper presents a control scheme for load balancing and power factor correction in three-phase four-wire systems using a three-phase four-leg active power filter. It is assumed that the active power filter is connected to a load that can be unbalanced and may also draw harmonic currents. The four-leg active power filter is used for harmonic compensation, reactive power compensation, load balancing and neutral current compensation as well as improving the supply side power factor. The proposed control strategy is more effective and flexible and also has lower cost and higher efficiency. The topology and operation principle of the proposed control method is discussed in detail, finally the feasibility of such a scheme is demonstrated through simulation studies.