Distribution Static Compensator (DSTATCOM) is a device which can be used for compensation of harmonics present in source currents in distribution network. The performance and usefulness of DSTATCOM is examined for linear and non-linear load with source being non-stiff (weak). The presence of non-stiff source makes source currents and voltage at point of common coupling (PCC) unbalanced as well as disturbed. In this paper, a voltage source converter (VSC) based DSTATCOM is employed to eliminate above mentioned issues. For reference current generation of DSTATCOM, instantaneous symmetrical component theory (ISCT) method has been used. The distribution network is simulated with MATLAB / SIMULINK software and results are presented.