The active power filter with magnetic flux compensation can suppress the influence of background harmonics and load harmonics by increasing the harmonic impedance of the system. Flux compensated adjustable impedance is the key part of active power filter, which can increase the harmonic impedance without affecting the fundamental impedance. With the traditional compensation method, the adjustable impedance contains a negative resistance component in the frequency band between the fundamental and the harmonics, which may interact with the load impedance and cause the system resonance. After establishing a general mathematical model of adjustable impedance and system equivalent admittance, this paper analyzes the resonance mechanism, oscillation characteristics and key influencing factors of the harmonic oscillation. The damping suppression strategy is proposed to successfully eliminate the resonance while maintaining good harmonic suppression performance. The correctness of the analysis and the effectiveness of the suppression method are verified by simulation and experiment.