A compensation circuit and a compensation method for providing compensation of a power converter are proposed. A current sense circuit is coupled to receive a switching current for generating a current signal. A signal generation circuit is developed to generate a first compensation signal and a second compensation signal for adjusting the current signal. The first compensation signal is coupled to adjust the current signal for the output power limit of the power converter. The second compensation signal is coupled to adjust the current signal for the slope compensation. The slope of the first compensation signal is decreased when the power transistor is turned on. The slope of the second compensation signal is increased in response to the turn on of the power transistor.