An improved model predictive control (MPC) with Luenberger state observer is proposed in this article for LC-coupling hybrid active power filter (LC-HAPF). Generally, the implementation of MPC for LC-HAPF requires additional sensors for measuring coupling capacitor voltage, which increases the system cost and reduces reliability. Besides that, there exists a certain degree of steady-state error because of the discretization and prediction. To relax these problems, the Luenberger observer is utilized to estimate the capacitor voltages without additional sensors and the delay compensation is given for the digital control delay. Finally, the effectiveness of the improved MPC for LC-HAPF is verified by simulation results. The results show that the proposed method has the fast dynamic response and low steady-state error.