We first present a new multi-modular shunt active power filter system suitable for large-capacity compensation. Each module in the system has the same circuit topology, system functionality, and controller design, to achieve coordination control among the modules. The module’s reference signals are obtained by multiplying the total reference signal by the respective dis-tribution coefficient. Next, a novel fault-tolerant approach is proposed based on split-phase control in the a-b-c frame and real-time bus communication. When a phase fault occurs, instead of halting the whole module, the proposed strategy isolates only the faulted bridge arm, and then recalculates the distribution coefficients and transfers the compensation capacity to the same phases of the other normal modules, resulting in a continuous operation of the faulted module and optimization of the remaining usable power devices. Through steady-state analysis of the post-fault circuit, the system stability and control reliability are proven to be high enough to guarantee its engineering application value. Finally, a prototype is established and experimental results show the validity and feasibility of the proposed multi-modular system and its fault-tolerant control strategy.