A novel active reactor based on harmonic magnetic flux compensation and its control method is presented. The active reactor is composed of a main winding, a compensation winding, and a controllable current source. When a compensation current, which is in phase with the main winding current, is injected into the compensation winding, the inductance of the main winding can be changed, and a negative inductance also can be realized at certain conditions. When a compensation current, which is of orthogonal phase with the main winding current, is injected into the compensation winding, the equivalent resistance of the main winding can be changed. Experiment system of active reactor was developed and the results show that the equivalent inductance of the tested reactor can be adjusted continuously. The application of the active reactor in harmonic mitigation is investigated, and the simulation results indicate that the control characteristic of the active reactor satisfies the requirements of continuously tuned filter to the tuning reactor