Nowadays, power quality (PQ) issues are gaining considerable attention to both electrical utilities and end-users as they are causing significant financial losses to industrial customers. Among PQ issues, voltage sag and swell are the most important and frequently occurring problems for sensitive load. Voltage sag/swell can be mitigated using a distribution static compensator (DSTATCOM), which is fast, effective, and flexible custom power device. Its performance mostly depends upon the designed control scheme for the switching of voltage source converter (VSC). In this research work, a fused control scheme based on second-order super twisting algorithm (STA) and sliding mode control (SMC) for VSC of DSTATCOM is developed, that can effectively eliminate the effects of voltage sag/swell as well as compensate active and reactive power in distribution system. STA along with standard SMC is used to eliminate the chattering effect which is the drawback of SMC alone, while keeping its other properties such as robustness, faster response time, and insensitive to load variation. The proposed control scheme for DSTATCOM is simulated on SimPower system toolbox of MATLAB/Simulink. Both linear as well as nonlinear loads have been considered for the purpose of static and dynamic analysis. Simulation results show that the super twisting sliding mode control (STSMC) for DSTATCOM can effectively detect and correct voltage sag/swell and compensate active and reactive power within 2.5 milliseconds as per semiconductor processing equipment voltage sag immunity standard for sensitive load (SEMI F-47 Standard). Total harmonic distortions (THD) measured in all simulated cases is found to be less than 5%. The frequency response analysis shows good stability properties of developed system.