This paper presents harmonic performance analysis of autonomous minigrid integrated distributed power system, seen from a power-quality viewpoint using FFT analysis; describes the main relations between minigrid and harmonics, and goes into some detail for some of the aspects. The main aim of this paper is to explain the effects of harmonics in the minigrid side and steps to reduce harmonics. This paper will also discuss how harmonic distortion is one of the most important issues associated with power quality and creates several disturbances to the distributed System. Here inverter is controlled to perform as a multifunction device by cooperative active power functionality and be used as a power converter. Harmonic monitoring in proposed system is discussed in detail. Harmonics reduction technique using PWM to reduce the THD ratio and it will also include the simulation for the same.