Non-linear devices draw non-sinusoidal currents from the source; hence, they cause harmonic distortions in power systems. The shunt active power filter (SAPF) is a well-known method for alleviating current harmonics, compensating the reactive power and improving the power factor; however, the effective design of an SAPF is quite challenging and a thrust area of research. The current controlling technique, switching pulse generation technique and parameter selection are cumbersome tasks in SAPF design. SAPF performance depends on the proper selection of many parameters, such as filter interfacing impedance, DC-link capacitor and PI-controller gains. The effect of these parameters on the performance of SAPF has been studied and optimum values have been obtained by using the Taguchi method. This paper also indicates the benefits of using the Taguchi method compared with existing genetic algorithm (GA) for optimizing the parameters of the SAPF. An instantaneous reactive power theory (IRPT)-based SAPF has been modeled and simulated in MATLAB/Simulink. The SAPF’s parameters have been optimized by using the both proposed Taguchi SNR and the existing GA method. With optimized values of parameters results have been obtained, analyzed and the superiority of the proposed Taguchi method over the existing GA method is discussed. The simulation results were also validated with experimental results.