In high power applications such as static synchronous compensator (STATCOM) used for reactive power compensation, it is essential to reduce semiconductor losses and associated cost to a minimum value while maintaining desired key attributes. This paper presents a new hybrid switching STATCOM that addresses the semiconductor device losses while ensuring the usual STATCOM operating criterion. Design and control of the hybrid STATCOM are presented followed by real-time simulation results to validate the proposal. Losses are calculated and the results are compared with a conventional two-level voltage source converter (VSC) based STATCOM to quantify the benefits of the proposed hybrid STATCOM. It is demonstrated that the proposed hybrid STATCOM achieves close to 10% lower semiconductor losses compared with a conventional two-level STATCOM.