Abstract: In order to solve the traction substation power quality problem,including poor power factor,bad harmonic pollution,and large negative sequence current,considering the predominance of active and passive compensators,a low-cost hybrid dynamic compensation system constituted by classical large capacity thyristor switched capacitor（TSC） structure and a small static var generator（SVG） was proposed.The former was used to provide step compensation by laden reactive power,and the latter was used to compensate for the error of TSC and loads.The active capacity was minimize by the method of duple allotting,and the mathematical model of real time reactive power optimization control was proposed to decrease negative sequence current.The switch frequency of SVG was changed by anticipative reactive power quantum to improve the effect of suppress harmonic.The effectiveness and feasibility of the proposed system was proved by means of comparing and analyzing the power quality parameter data before and after the proposed system put into operation.