Islanding refers to a condition where distributed generators (DGs) inject power solely to the local load after electrical separation from power grid. Several islanding detection methods (IDMs) categorized into remote, active, and passive groups have been reported to detect this undesirable state. In active techniques, a disturbance is injected into the DG's controller to drift a local yardstick out of the permissible range. Although this disturbance leads to more effective detections even in well-balanced island, it raises the total harmonic distortion (THD) of the output current under the normal operation conditions. This paper analyzes the power quality aspect of the modified sliding mode controller as a new active IDM for grid-connected photovoltaic system (GCPVS) with a string inverter. Its performance is compared with the voltage positive feedback (VPF) method, a well-known active IDM. This evaluation is carried out for a 1 kWp GCPVS in MATLAB/Simulink platform by measuring the output current harmonics and THD as well as the efficiency under various penetration and disturbance levels. The output results demonstrate that since the proposed disturbance changes the amplitude of the output current, it does not generate harmonics/subharmonics. Thereby, it has a negligible adverse effect on power quality. It is finally concluded that the performance of the sliding mode-based IDM is reliable from the standpoints of islanding detection and power quality.