Current harmonic and unbalanced voltage are two important factors that affect the power quality for microgrid.In this paper, a novel dynamic phasors based method for both harmonics detection and positive-negative sequence decomposition is proposed. This method involved in a new Park transformation using the dynamic phasors, it can simplify the control structure, and can simplify the design work for a simple control and avoid LPF and BSF. Simulations on the proposed method and its application in APF are presented and show a satisfactory result.