The mathematical model of distribution static synchronous compensator (D-STATCOM) in each sequence equivalent circuit of unbalanced load is established and the feedback linearization applied to both the positive and negative sequence mathematical model is proposed. The three-phase three-wire unbalanced load current can be decomposed into the positive and negative sequence component, so they can be compensated in the synchronous rotating coordinates system of positive and negative sequence respectively. The positive sequence control makes D-STATCOM generate reactive current required by the load, improving the power factor. The negative sequence control is used to compensate the negative sequence current due to load unbalance in order to balance the grid side current and meet the requirements of National standard. At last, a 10 Mvar/10 kV D-STATCOM system is built in PSCAD, and the simulation results prove that the control strategy can compensate the load unbalance and generate reactive current required by the load at the same time. Furthermore, when the voltage unbalance in the grid side exceeds the national standard, the control strategy can also achieve the desired results, showing the effectiveness.