The scarcity of quality power is one of the ultimate cause is due to the fast growth of nonlinear load in power distribution system. In this paper, PEM (Proton Exchange Membrane) fuel cell supported three-leg Distribution Static Compensator (DSTATCOM) is involved for harmonics elimination, load balancing, unity power factor operation and voltage regulation under both balanced and unbalanced nonlinear loading conditions. The Adaline Least mean square (LMS) control scheme is proposed for switching signal generation voltage source converter (VSC). The two PI controllers are used in both DC side and AC side to adjust the constant voltage respectively, which helps in regulating the DC link voltage of DSTATCOM. The proposed system including DSTATCOM is simulated to observe performance in MATLAB/SIMULINK environment.