This paper designs a shunt active power filter with the novel fuzzy sliding mode control method to solve the harmonic compensating problem in three-phase three-wire grid and reduces the harmonic distortion of the supply current successfully. The p-q harmonic detection method is applied and the harmonic component in load currents can be extracted quickly and exactly. The PI control technique is used to control the stability of capacitor voltage in DC side. The designed fuzzy sliding mode control method is applied in the reference current control. Simulation results reveal, compared to the hysteresis controller, the designed fuzzy sliding mode control method can reduce tracking error obviously and improve the harmonic compensation effect of active power filter.