AC railway vehicles controlled by PWM line side converters inject harmonic current into the feeding overhead line. This causes problems such as resonance expansion which will lead to malfunctions or overcurrents at substations and electromagnetic interference with signalling systems. Normal active filters only shift the harmonic frequencies to a higher range. A novel harmonic compensator produces an exact counter mmf which becomes sinusoidal in the main transformer main flux then becomes sinusoidal. Experimental results from a small model of a Japanese AC railway vehicle are described. Especially, harmonic currents are very well suppressed in the 3-4 kHz frequency range that coincides with the signalling band. As a result, this novel harmonic compensator and its method appear promising for use in any 50 Hz, and 60 Hz fed PWM controlled AC railway traction system.