In this paper, a wavelet-based low-pass filter (WBLPF) is proposed to improve the direct current (DC) component separation speed. To this end, three different methods are studied to implement discrete wavelet transform, and then they are compared with each other in term of transient response time, accuracy and computational cost. Afterwards, the conventional low-pass filter is replaced by the new WBLPF in the p-q method. This replacement increases the speed of DC component separation, and consequently the performance of the shunt active power filter is improved. To verify and examine the proposed method, a power system is simulated in MATLAB software and a prototype is implemented in the laboratory. The simulation and experimental results confirm the superiority of the proposed method.