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Distribution static compensator (DSTATCOM) is a shunt compensation device that is generally used to solve power quality problems in distribution systems. In an all-electric ship power system, power quality issues arise due to high-energy demand loads such as pulse loads. This paper presents the application of a DSTATCOM to improve the power quality in a ship power system during and after pulse loads. The control strategy of the DSTATCOM plays an important role in maintaining the voltage at the point of common coupling. A novel adaptive control strategy for the DSTATCOM based on artificial immune system (AIS) is presented in this paper. The optimal parameters of the controller are first obtained by using the particle swarm optimization algorithm. This provides a sort of innate immunity (robustness) to common system disturbances. For unknown and random system disturbances, the controller parameters are modified online, thus providing adaptive immunity to the control system. The performance of the DSTATCOM and the AIS-based adaptive control strategy is first investigated in MATLAB-/Simulink-based simulation platform. It is verified through a real-time ship power system implementation on a real-time digital simulator and the control algorithm on a digital signal processor.