Abstract -Four-wire microgrids and distribution systems are inherently unbalanced with the presence of negative and zero sequence components in voltages and currents. In small autonomous systems the imbalance, in addition to the harmonic distortion produced by non-linear loads, can significantly affect power quality, loadability and stability of the system. Furthermore, in isolated networks with significant generation from intermittent renewable energy sources, the stiffness of the system is reduced and this could amplify the effects of imbalance on the stability and power quality. To mitigate some of these problems, a novel methodology based on the application of a 4-leg Active Power Filter (APF) is proposed in this paper. The control of the compensator is based on the Conservative Power Theory (CPT) augmented by Resonant Controllers. The behaviour of the proposed system is demonstrated using an experimental prototype deployed in a laboratory scale microgrid Index Terms-Active power filter, conservative power theory, resonant control, microgrids, imbalance, harmonic distortion.