Increasing the application of power in electronic devices has increased the harmonics in power systems. Numerous methods like the synchronous reference frame (SRF) and the p-q-based method have been suggested to overcome the effects of these harmonics. The conventional SRF method provides acceptable results in harmonic compensation of high-order harmonics (higher than the fourth order), but the transient response time will be drastically increased in the presence of low-order harmonics due to the existence of a conventional low-pass filter. Furthermore, if the load terminal voltages are distorted, then the conventional SRF method will become unable to implement load current compensation. This research has used wavelet transform to overcome these difficulties. The proposed method is not only faster than conventional SRF, but it can also compensate the load currents if the load terminal voltages are also distorted. The simulation and experimental results are performed using MATLAB/Simulink and digital signal processor TMS320F28335 to verify the proposed method.