Power quality (PQ) problems have become a serious concern of both power suppliers and end user customers with the deregulation of the electric power market. In the recent years, power electronics based compensation devices with advanced technology has been required due to the inadequate of conventional compensation devices to improve PQ in utility grid. This paper presents a comprehensive review of shunt compensating custom power devices (CPD) connected to distribution system mainly Distribution Synchronous Static Compensator (DSTATCOM) and Active Power Filter (APF). A broad overview on various control methods to compansate different PQ problems used in DSTATCOM and APF's and the main operation principles of these devices are provided. The practical applications and recent research advances on DSTATCOM and APF's are presented by reviewing nearly 120 papers.