Multi-functional grid-connected inverter (MFGCI) is an effective solution for smart grid application to interface renewable energy sources and provide ancillary services. In this study, the controller of an MFGCI-based distributed generator (DG) is investigated. On the basis of impedance reconfiguration, multiple coupled ancillary services of a DG are modelled to upgrade DG, including power quality conditioning, virtual synchronous generator emulation, and harmonic resonance damping. Analyses highlight potential benefits of DGs to actively participate in some possible services. From the perspective of impedance model, an upgrading solution is also proposed to coordinate these services in a DG. Using the proposed equivalent circuit model, these ancillary services can be uniformly considered as impedance control of the distribution network. Detailed models are presented to explain the principles of ancillary services. Experimental results of a test rig confirm the ancillary services of DG to enhance the power quality, provide virtual inertia, and eliminate the harmonic resonance.