Conventional control methods for controllable reactor of transformer type generally depend on the parameters of transformer and cannot control capacitor voltage effectively. A novel control method for controllable reactor of transformer type is proposed. Based on a novel algorithm for fundamental extraction, the proposed approach can control the reactance accurately in realtime mode by monitoring the condition of primary voltage and current. It also can control the capacitor voltage effectively and keep the capacitor voltage stable by introducing the feedback of capacitor voltage to control the phase of secondary current. Simulation has been carried out to proof the effectiveness of the method.