In order to achieve the reliable operation of active power filter (APF) in the AC side current transformer fault state, a fault-tolerant control strategy based on the phase current reconstruction of AC side current transformer is proposed. By analyzing the deficiencies of phase current reconstruction based on hysteresis SVPWM control, the strategy of designing state observer in phase current reconstruction is proposed. This paper constructs the current closed-loop observation model of active power filter, and uses the observed current value to revise the missing reconstruction current to solve the problem of current reconstruction incompleteness in the phase current reconstruction techniques under hysteresis SVPWM control. Finally, the operation of the APF system under fault condition is realized. The results by both Matlab/Simulink and experiments in the experimental prototype demonstrate the correctness and feasibility of the method.