Owing to the ability of both reactive power support (RPS) and grounding fault control (GFC), composite devices have attracted extensive attention. However, most existing composite devices have some disadvantages, such as high capacity and the need for additional power supply devices. To address these problems, a novel RPS and GFC composite device (RGCD) is proposed in this paper from the idea of making full use of existing station resources. Firstly, the topology and the operation principle of RGCD are introduced. The RGCD is composed of the capacitor and the arc suppression coil in the station and the multi-functional converter (MC). When the distribution network is in normal operation, most of the reactive power required by the load is compensated by the capacitor in the station, and the remaining reactive power is compensated by the MC. When the single-phase grounding fault occurs, the reactive power can still be compensated by the capacitor in the station, and the grounding fault is controlled by the arc suppression coil in the station and the MC. In brief, the capacity of the MC is decreased under different operating modes. In addition, the energy flow mechanism during GFC is analyzed in detail, and a P-Q two-phase arc suppression method based on DC-side voltage stability is proposed, which realizes the stable operation of RGCD without additional power supply devices. The simulation results demonstrate the effectiveness and feasibility of the proposed topology and regulation strategy.