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This paper deals with the hardware implementation of a shunt active filter (SAF) for compensation of reactive power, unbalanced loading, and harmonic currents. SAF is controlled using an adaptive-linear-element (Adaline)-based current estimator to maintain sinusoidal and unity-power-factor source currents. Three-phase load currents are sensed, and using least mean square (LMS) algorithm-based Adaline, online calculation of weights is performed and these weights are multiplied by the unit vector templates, which give the fundamental-frequency real component of load currents. The dc bus voltage of voltage source converter (VSC) working as a SAF is maintained at constant value using a proportional-integral controller. The switching of VSC is performed using hysteresis-based pulsewidth-modulation indirect-current-control scheme, which controls the source currents to follow the derived reference source currents. The practical implementation of the SAF is realized using dSPACE DS1104 R&D controller having TMS320F240 as a slave DSP. The MATLAB-based simulation results and implementation results are presented to demonstrate the effectiveness of the SAF with Adaline-based control for load compensation.