This paper proposes a hybrid control algorithm to maximize utilization and functionality of distribution static compensator (DSTATCOM). This control algorithm combines the different aspects of DSTATCOM operation and tries to mitigate the voltage and current harmonics, balance the source currents, improve the power factor, compensate for voltage disturbances such as sag and swell, reduce the losses and rating of inverter, and control the load power for energy conservation while analyzing their effects on the consumers. Moreover, at any time of operation, performance of proposed control algorithm based DSTATCOM is superior compared to its conventional counterparts. With all these advantages, proposed scheme provide a promising solution to enhance the operation of power distribution system. Detailed simulation results are presented to validate the performance of the proposed scheme.