The work delineated in this paper deals with the reduced sensor-based operation of PV-DSTATCOM (Photovoltaic distribution static compensator) focusing on the voltage source inverter (VSI) switch current limiting control. In this study, the soft computing technique of PV-DSTATCOM control based on the variable leaky least mean square (VLLMS) algorithm is modified to incorporate both reduced sensor and switch current limiting schemes. DSTATCOM is predominantly introduced to improve current related power quality issues by providing non-real power (i.e., the reactive and harmonic component) of the load demand. However, during uncertain increase in the non-real power requirement at the load end due to sudden change in the load demand or any other transient conditions, the non-real current injected by the DSTATCOM may increase to a level which is beyond the current handling capacity of the DSTATCOM switches. As a consequence, the switches may become permanently damaged and, subsequently, the performance of the DSTATCOM will deteriorate. Hence, the current through the VSI switches can be limited by controlling the amount of non-real power flow from the DSTATCOM. During this transient or high current condition, the control transits from power quality improvement mode to protection mode. As a result, unity power factor operation at P.C.C (common point of coupling) is compromised for that period or few cycles of transient condition. Moreover, the efficient operation of any control demands proper information about the current and the voltage of the system, which are determined by sensors. However, the faults in these sensors may deteriorate the controller performance and degrade the system efficacy. Therefore, to mitigate this issue, the numbers of measurement units are reduced i.e., the measurement of current in only two phases for load as well as grid, and the measurement of line voltages using two voltage sensors instead of three sensors for each phase. The reduction of sensors is accomplished without compromising the controller efficiency. Further, the system is studied using MATLAB/Simulink under different condition of steady- state, varying solar irradiance, increasing load above rated capacity.