This paper presents a shunt active power filter connected to the grid via an LCL coupling circuit with implemented closed-loop control. The proposed control system allows selective harmonic currents compensation up to the 50th harmonic with the utilization of a model-based predictive current controller. As the system is fully predictive, it provides high effectiveness of the harmonic reduction, which is proved by waveforms achieved in performed tests. On the other hand, the control system is prone to loss of stability. Therefore, the paper is focused on the stability analysis of the discussed control system with the additional outer control loop of the supply current with predictive control of this current. The conducted stability analysis encompasses the assessment of system stability as a function of the coupling circuit parameter identification accuracy, whose values are implemented in the current controller, as well as parameters such as the sampling frequency and proportional-integral (PI) controller coefficients. The obtained results show that the ranges of the LCL circuit parameter identification accuracy for which the system remains stable are relatively wide. However, the most effective compensation of the supply current distortion is achieved for the parameters identified correctly, and the greatest impact on the compensation quality has the value of L1 inductance.