This study aims to present a modified adaptive fuzzy control (MAFC) for power quality improvement, whereby adaptive fuzzy control with parameter adaptive capability is employed to emulate optimal control. Different from conventional fuzzy control-based current control method without analytical tools to guarantee basic performance criteria, high-performance control system can be realized using Lyapunov-based adaptive fuzzy control. Also, in order to compensate the fuzzy approximation error (FAE) in conventional fuzzy control, a modified adaptive fuzzy control with adaptive compensator is developed. Unlike the existing approaches, adaptive compensator can estimate the optimal value of FAE with no need of upper bound of FAE. Simulation and experimental results verify that proposed control strategies reveal superior performance under different conditions.