This paper presents a novel architecture to enhance the performance of grid‐connected photovoltaic (PV) systems through the introduction of several key novelties. Firstly, a packed U‐cell seven‐level (PUC7)‐based single‐phase solar active filter is implemented, offering a comprehensive solution for harmonics mitigation, reactive power compensation, and efficient power extraction from the PV source, while facilitating the injection of real power into the grid. Secondly, the p‐q power injection algorithm is modified to accommodate the extraction of solar power from the PV generator to the grid, simultaneously addressing the need for harmonic current injection to improve power quality. This modification ensures dynamic performance by extracting reference current with harmonic content and solar power information, thereby enhancing the system's overall efficiency. Lastly, the proposed architecture undergoes real outdoor testing, validating its performance in various key aspects including maximum power tracking, reduction of total harmonic distortion in comparison with previous work, operation at unity power factor, and testing the effective operation of the multifunction feature. These contributions collectively demonstrate the effectiveness of the proposed system in enhancing power injection quality and reactive power compensation under real outdoor conditions of PV systems connected to the grid.