This document describes a study investigating the use of a voltage source converter (VSC) based distribution static compensator (D-STATCOM) with a fuzzy logic controller (FLC) for voltage stability improvement and harmonics elimination in a power distribution system. The proposed scheme employs a cascaded H-bridge multilevel inverter which has advantages over conventional devices like reduced harmonic distortion and switching losses. Simulation results show that the D-STATCOM is able to compensate reactive power, improve power factor, enhance voltage stability, and eliminate total harmonic distortion from non-linear diode rectifier loads. The fuzzy controller is used to regulate the DC capacitor voltage. The cascaded H-bridge inverter provides multi-level voltage waveforms and reduces