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In this paper, model reference adaptive control (MRAC) is proposed for a single-phase shunt active power filter (APF) to improve line power factor and to reduce line current harmonics. The proposed APF controller forces the supply current to be sinusoidal, with low current harmonics, and to be in phase with the line voltage. The advantages of using MRAC over conventional proportional-integral control are its flexibility, adaptability, and robustness; moreover, MRAC can self-tune the controller gains to assure system stability. Since the APF is a bilinear system, it is hard to design the controller. This paper will solve the stability problem when a linearization method is used to solve the nonlinearity of the system. Moreover, by using Lyapunov's stability theory and Barbalat's lemma, an adaptive law is designed to guarantee an asymptotic output tracking of the system. To verify the proposed APF system, a digital signal controller (dsPIC30F4012) is adopted to implement the algorithm of MRAC, and a 1-kVA laboratory prototype is built to test feasibility. Experimental results are provided to verify the performance of the proposed APF system.