This paper presents the photovoltaic power generation and active filter (PV-AF) system for local load supply and harmonic compensation with unbalanced and distorted supply voltage. In this paper a control strategy using vectorial theory proper for any kind of loads and supply voltages and a simple method for maximum power point tracking (MPPT) are proposed. The vectorail theory and simple MPPT method are used as reference current generator for PV-AF system that injects maximum available power of PV array and compensates load harmonics, reactive power and imbalance. Finally simulation is performed by PSCAD/EMTDC software, and results are presented to demonstrate effectiveness of proposed method.