A reference current detection method based on synchronous reference frame transformation and discrete Fourier transform (DFT) is presented to make SVG provide synthetic compensation including reactive power compensation, harmonic compensation and unbalanced current compensation. By using recursive DFT algorithm in the rotating reference frame, the proposed method can be used to extract reactive currents, unbalanced currents and characteristic harmonic currents from the load currents in real time. This method allows the simultaneous compensation of two current harmonics with just one regulator, yielding a significant reduction of the computational effort and easy engineering implementation compared with other methods. The results of simulation and experiment show the validity of this method.