Harmonic current estimation is required in active power filters for compensation purposes. The most efficient way of calculating the total harmonic current up to the infinite order is to subtract the fundamental component from the distorted current. Direct determination of the fundamental component of a distorted current of mains frequency was realized recently with a third-order modulation integral observer. This article shows that using an exponential modulation function (Exp-MF) for the integral observer will: 1) significantly enhance the robustness of the observer against noise and 2) automatically remove the low-frequency envelope arising from the D/A and A/C sampling processes compared to previous polynomial modulation function. These new and advantageous features are supported with detailed analysis and experimental verification. The robust observer can be implemented in grid-connected power electronics circuits that require the instantaneous information of the fundamental and/or harmonic currents. Practical comparative tests with the adaptive notch filter and recursive discrete Fourier transform (DFT) methods in an active power filter have confirmed the good performance under both the steady and dynamic states of the proposed Exp-MF integral observer.