In view of the traditional distribution static synchronous compensator compensation capacity is small, the problem such as impact current is big, in this paper, based on modular multilevel inverter three phase four wire system distribution static synchronous compensator (DSTATCOM) was proposed. Firstly analyzes the MMC - the topology structure and the equivalent model of DSTATCOM, superposition of dc side voltage active current balance and according to the relationship between charge and discharge to ensure child module voltage, at the same time consider circulation inhibition, double frequency voltage to eliminate circulation effect, by using carrier phase shift technique was concluded that the equivalent output voltage of the output, so as to realize the comprehensive compensation effect of power distribution network, the final use of Matlab/Simuilink environment to build model for the simulation analysis, confirmed the feasibility and effectiveness of the proposed method.