The algorithms for adaptive canceling of selected harmonic components have been well developed in digital signal processing. In those applications, "filtering" is a primary objective. However, in power electronic applications control, with objectives like fast response of system on reference and disturbance change, is of primary importance. This paper provides a novel and a systematic design approach for applying signal processing methods (like modified adaptive selective harmonic elimination algorithms) as an addition to conventional control. Thus, both control objectives like fast transient response and efficient harmonic (disturbance) filtering are achieved. The filtering algorithm does not interfere and has minimal impact on the stability of the primary control loop. Its sole function is to eliminate undesirable higher harmonic components from selected variable (current or voltage) and it requires only knowledge of the frequency. of the component to be eliminated. The methodology is applicable for a wide range of equipment like uninterrupted power systems, regenerative converters, active power filters, etc. The application of the proposed method in a regenerative voltage source converter for dead time compensation is used as an example for illustrating its effectiveness and design procedure.