Abstract— This article aims to design a linear quadratic regulator (LQR)-based optimal current controller along with a Luenberger observer model in order to enhance power quality during the grid’s dynamic conditions.  To analyze the performance of the proposed control scheme, a three-phase photovoltaic-based gird-tied inverter is considered. A grid controller comprises a DC-link voltage controller to stabilize the capacitor voltage and a current controller to assure the output currents are well controlled according to the dynamic conditions of the grid as well as the source. In general, the capacitor-voltage and current controllers are regulated by traditional proportional Integral (PI) controllers which is associated with many demerits. In this work, a predictive LQR-based current controller with an observer algorithm and an adaptive capacitor voltage controller is proposed to improve the performance of the power grid at various dynamic conditions. The mathematical analogy is evaluated using MATLAB/SIMULINK software with different load and grid-disturbance conditions. Moreover, a laboratory prototype is designed to validate the simulation results. The outcomes prove that the proposed controller is dynamically robust to tackle any disturbance in load and grid.