In recent decades, multi-level converters have become popular and used in many power systems applications. Compared with conventional converters, multi-level converters contribute to reducing the voltage stress on the switching devices and enhancing the power quality delivered to the load. In this paper, the study of the five-level diode clamped multilevel converter based static synchronous compensator has been accomplished. Model Predictive current control strategy which a type of modern control algorithms was employed for driving the proposed compensator. The suggested five level converter controlled by model predictive current control is firstly examined to verify that this control algorithm is appropriate for achieving the desired performance. Then the proposed converter and control combination is employed and simulated as a static synchronous compensator in distributed power system. Moreover, in order to examine the robustness of this compensator, the load status is suggested to be heavy inductive. Simulation process has been performed using MATLAB – SIMULINK software package. The results show that the implemented configuration (converter and control algorithm) provides high power quality improvement with adequate reactive power compensation.