There are two compensation methods during distribution system currently: high voltage centralized compensation and low voltage user end distributed compensation. Towards the problems of the two compensation method, this paper proposes a technology of integrating distribution transformer and static var compensation(DT-STATCOM). The technology takes the distribution transformer of box substation as the control node of reaction power and power quality. It uses the surplus capacity of transformer to compensate the reactive power. And by setting the connect voltage reasonably, it decreases the withstand voltage level and current capacity of switching devices, which benefit the economic and technical indicators. In addition, the integration structure reduces the volume and cost of compensation device. Meanwhile, towards the command current detection problem caused by the special structure of DT-STATCOM, this paper proposes a novel reactive current detection method across the transformer's ports. Then the paper designs the control system based on the multi-lateral information. At last, the simulation and prototype test show that, the DT-STATCOM system had significant effect on dynamic reactive power compensation, transformer voltage support and imbalance inhibition.