Distributed generation (DG) systems are usually connected to the grid using power electronic converters. Power delivered from such DG sources depends on factors like energy availability and load demand. The converters used in power conversion do not operate with their full capacity all the time. The unused or remaining capacity of the converters could be used to provide some ancillary functions like harmonic and unbalance mitigation of the power distribution system. As some of these DG sources have wide operating ranges, they need special power converters for grid interfacing. Being a single-stage buck-boost inverter, recently proposed Z-source inverter (ZSI) is a good candidate for future DG systems. This paper presents a controller design for a ZSI-based DG system to improve power quality of distribution systems. The proposed control method is tested with simulation results obtained using Matlab/Simulink/PLECS and subsequently it is experimentally validated using a laboratory prototype.