As the power quality problem getting prominent in distribution networks with small hydropower injected, which existing reactive power compensation capacitors are difficult to solve, DSTATCOM is adopted to suppress the over voltage and the fluctuation caused by hydropower in this paper. Based on MATLAB/Simulink, a model of distribution networks with small hydropower injected and a control model of DSTATCOM are established. By simulating DSTATCOM in 3 ways and in two extreme conditions of distribution networks which are the condition at peak load in dry season and at valley load in wet season, the results show that DSTATCOM can effectively solve voltage quality problems due to small hydropower injection. Besides, DSTATCOM connected to the parallel point has better voltage control than DSTATCOM connected to the end of the feeder.