To achieve economical compensation for the huge-capacity negative sequence currents generated by high-speed railway load, an electromagnetic hybrid compensation system (EHCS) and control strategy is proposed. The EHCS is made up of a small-capacity railway static power conditioner (RPC) and a large-capacity magnetic static var compensator (MSVC). Compared with traditional compensation methods, the EHCS makes full use of the SVC’s advantages of economy and reliability and of RPC’s advantages of technical capability and flexibility. Based on the idea of injecting a negative sequence, the compensation principle of the EHCS is analyzed in detail. Then the minimum installation capacity of an EHCS is theoretically deduced. Furthermore, a constraint optimization compensation strategy that meets national standards, which reduces compensation capacity further, is proposed. An experimental platform based on a digital signal processor (DSP) and a programmable logic controller (PLC) is built to verify the analysis. Simulated and experimental results are given to demonstrate the effectiveness and feasibility of the proposed method.