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The design, development and experimental investigations of an active filter (AF) are considered. A current-controlled voltage source inverter is used as an AF system. The AF system employs power balance theory, which in this investigation is implemented using a TMS320C31 DSP. The design details, including necessary equations of a prototype model of the AF system, are given. The AF system is tested with nonlinear balanced and unbalanced loads to demonstrate its effectiveness and capabilities for harmonic elimination, reactive power compensation, power-factor correction and load balancing. The developed prototype model of the AF system is tested for different operating conditions of nonlinear load. Experimental results are given and discussed in detail.