Ever increasing nonlinear loads and supplies are changing dynamics of the electrical network. The levels of harmonics are on the rise and polluting more and more of the electrical network, posing new challenges before the designers and operators. To maintain the present power quality levels and to improve the performance of the electrical network, many control schemes and devices like Active Power Filter's have been proposed, but still an improvement is required. This paper proposes a five-level diode clamped Multilevel Inverter based Distribution STATCOM (MLI-DSTATCOM) with Synchronous Reference Frame based control for harmonic mitigation. A three-phase four wire system with nonlinear, balanced/unbalanced load is designed and simulated in Matlab/Simulink for performance analysis of proposed MLI-DSTATCOM. The results provide the evidence of restricting harmonic currents at load end and prevent from entering into source effectively. The performance of five-level, three-level and two-level DSTATCOM's are compared under nonlinear, balanced/unbalanced load. Simulation result analysis show superior performance of five-level diode clamped MLI-DSTATCOM controlled using SRF.