Power quality is one of the important issues in wind energy systems as in all renewable energy systems. Reactive component of current in distribution systems causes negative effects on the network, including power loses, voltage drop, and reduced line capacity. Static Synchronous Compensator (STATCOM) has been used increasingly instead of conventional devices such as switched capacitor groups and Static Var Compensator (SVC) to improve the power quality. Flexible AC Transmission System (FACTS) devices such as STATCOM are also used in power distribution systems and called Distribution STATCOM (D-STATCOM). D-STATCOM is used to improve the power quality in distribution systems as an inverter based device. Fixed parameter conventional PI controllers are usually used to control D-STATCOM devices. D-STATCOM device used in a wind power distribution system has a voltage-controlled inverter structure based on a five-level H-bridge topology. A new indirect current control scheme based on synchronous reference frame theory is proposed to produce gate pulses that are needed for the inverter. A fuzzy adaptive PI controller (FLCM-PI) is designed and used in the control scheme such that the parameters of the PI controller are modified by a fuzzy logic controller (FLC) to adapt the operation for changing conditions. The D-STATCOM topology with the proposed controller is simulated and experimentally tested.