In order to develop an adjustable reactor with rapid and continuous regulation and limited harmonic output, a novel transformer-type adjustable reactor based on two-port network control is proposed. The secondary windings of transformer consist of several switched windings (SW) and a control winding (CW). The equivalent impedance of transformer's primary winding could be regulated arbitrarily by coarse adjustment and fine adjustment. The secondary winding of the unit under consideration has five sections which can be short circuited by thyristors. The thyristors are operated in such a way as to adjust the number of short-circuited sections in operation at any one time, which is used in coarse adjustment. In addition fine tuning of the system is provided by current source inverter feeding a secondary control winding, which is used in fine adjustment. The control system is simple and effective based on the two-port network control. The design and implementation approach of novel reactor are discussed in detail, and a 630kVA/6kV prototype is verified to design successful through the impedance calculation. The experimental results are given to verify the continuous tuning, fast response and limited harmonic generation of the novel adjustable reactor.