An active counterbalance for suspending a power swivel from a traveling block. The power swivel includes a motor drive assembly for rotating a drill string and a handling system for supporting a drill pipe. The counterbalance includes a motor which provides means for biasing the load capacity of the counterbalance when supporting the power swivel to allow vertical displacement of the power swivel relative to the traveling block. The counterbalance prevents damage to connecting or sealing surfaces when adding pipe to or removing pipe from the drill string because most of the weight of the power swivel and pipe suspending from the handling system is transferred to the counterbalance.