This paper deals with the design of static compensator (STATCOM)-based voltage regulator for self-excited induction generators (SEIGs). SEIG has poor voltage regulation and it requires adjustable reactive power source with varying load to maintain constant terminal voltage. The required reactive power can be provided by a STATCOM consisting of ac inductors, a dc bus capacitor, and solid-state self-commutating devices. Selection and ratings of these components are quite important for design and control of STATCOM to regulate the terminal voltage of SEIG. The analysis, design, and selection of these STATCOM components are presented for five different rating machines to operate at varying power factor loads. Two criteria (full and reduced rating of STATCOM) are considered while designing STATCOM-SEIG systems.