A new control scheme employing the Iterated Extended Kalman Filtering (IEKF) algorithm for synchronization of a PV system with a three-phase grid is proposed. IEKF accurately estimates the fundamental sinusoidal component of the distorted voltage signals at the Point of Common Coupling (PCC) and the current signal of the load. The Kalman gain is updated through the minimization of the estimation error covariance yielding accurate estimation of the fundamental component of the aforementioned voltage and current signals. IEKF uses an iterative loop to reduce the mean square error and also increases the convergence speed. The proposed IEKF-PI control scheme is implemented using MATLAB/Simulink first and then it is realised on a prototype of a single stage grid connected PV system developed in the laboratory. From the results obtained from both the simulation and experimental studies, it is concluded that after compensation, the grid current reaches the steady state faster using IEKF-PI than using EKF-PI and STF-PI. The Total Harmonic Distortion (THD) of the grid current is compensated to a lowest value of 3.5% using the proposed IEKF-PI control scheme than that obtained using both EKF-PI and STF-PI, despite distortion of PCC voltage and PCC voltage sag and swell condition.