In this paper, reference current components of a Distribution Static Compensator (DSTATCOM) are generated by using the popular control technique called instantaneous symmetrical component theory (ISCT). The performance of this method has been investigated under unbalanced loading conditions followed by the new IEEE Standard 1459 on power definitions. Performance of source current, source voltage & load current and their corresponding total harmonic distortion (THD) are presented. A supercapacitor is coupled with the DSTACOM to control its DC-link voltage rapidly within a reasonable time. An unbalanced non-linear loads supplied by a three-phase, four-wire distribution system is considered for the simulation study by using MATLAB/SIMULINK software. A spilt type capacitor is taken in voltage source converter (VSC) of the DSTACOM to compensate the neutral current in the system effectively. The control strategy behaved the better performance when DSTATCOM is coupled with a supercapacitor than the conventional DSTATCOM.