The electrical energy is one of the best and easily used forms of energy and with the advancement of technology; the dependency on the electrical energy has been increased greatly. However, the quality of power being supplied is affected by power quality problems that deteriorate the performance of the system. Nowadays, power quality problem is a big issue to the industrial customers. In fact, it’s generally accepted that most of power disturbances originate within facilities, rather than from utility-supplied electricity. Power quality in Bahir Dar Textile Share Company is mainly polluted by the use of semiconductor based electronic equipment. So, to improve power quality of a system, different custom power devices can be used at the customer premises such as Unified Power Quality Conditioner (UPQC), which mitigates both voltage and current quality related problems. Since UPQC is comprised of series active power filter (APF) which reduces all voltage related problems, and shunt active power filter which reduces all current related problems, harmonics and reactive power burden. In this paper pulse width modulation (PWM) based voltage source inverter (VSI) converter is used for the realization of UPQC in MATLAB/Simulink environment. PWM with the help of directquadrature-zero (dq0) transformation theory is used as controller for gating pulses of the insulated gate bipolar transistor (IGBT) switch. After the power quality problems investigation and assessment is held, the presented scenario is done with comparison of voltage and current level at different load type condition along PI and fuzzy logic controller-based controllers with the level of total harmonic distortion (THD) without and with UPQC. It has been observed that by designing the system without and with UPQC and after analyzed it using FFT analysis, the fuzzy logic controller has reduced the harmonics level of load voltage and current to 1.10% and 2.14% respectively. Thus, the device is capable of maintaining voltage and current harmonics level within permissible limit which satisfies the standards imposed by IEEE 519-1995. As the economical evaluations showed that the project is cost-effective and can be valid as investment.