Model Predictive Control (MPC) is a popular control scheme for controlling Voltage Source Converters, due to its fast-transient response and accuracy as compared to traditional hysteresis control. This paper presents a Distribution Static Compensator (DSTATCOM), which utilizes MPC strategy to make balanced and harmonic-free source current such that the power factor is unity at the source end. In addition, DSTATCOM is also used to maintain the load voltage at 1p.u. during voltage swells/sags. Further, this paper demonstrates effective switching of DSTATCOM between the Current Control Mode and the Voltage Control Mode with an objective such that only single DSTATCOM serves for the power quality problems that occur in both current and voltage. MATLAB/Simulink was utilized to verify the proposed scheme and results indicate the improvement in source current and load voltage when disturbances occur in the system.