This paper introduces an application of an active power filter (APF) in a real industrial zone smart grid for power quality (PQ) improvement issues. The random harmonics generated by on-grid PV inverters and non-linear loads that represent the topology of the industrial smart grid are mitigated, also the reactive power, voltage levels, and power factor were adjusted using a shunt active power filter (SAPF). Detailed design of APF and its hysterics control strategy were presented using the MATLAB/SIMULINK software package. The results prove that SAPF is an effective device to mitigate total harmonic distortion (THD), and has a fast dynamic response to regulate the grid's power factor (PF).