This document discusses using a diode-clamped multilevel inverter based STATCOM to provide both real and reactive power compensation on a transmission line. A STATCOM is a shunt connected device that can regulate voltage and provide reactive power support. A diode-clamped multilevel inverter is proposed for the STATCOM due to its ability to generate stepped voltage waveforms with lower harmonic distortion compared to a two-level inverter. Simulation results using MATLAB/Simulink show that the multilevel inverter based STATCOM can effectively regulate the voltage and maintain stability of the load while supplying real and reactive power to the transmission line.