Power quality is one of major concerns in the present era. It has become important, with the introduction of sophisticated devices, whose performance is very sensitive to the quality of power supply. Power quality problem is an occurrence developed as a nonstandard voltage, current or frequency that results in a failure of end user equipment. One of the major power quality problems on the power distribution network is the voltage sag. To solve this problem, the Dynamic Voltage Restorer (DVR), which is the most efficient and effective modern custom power device used in power distribution networks was used. Dynamic Voltage Restorer (DVR) is a series connected power electronic based device that can quickly mitigate voltage sags in the system and restore the load voltage to the pre-fault value. Its appeal includes lower cost, smaller size, and its fast dynamic response to the disturbance. This thesis describes the effectiveness of using the dynamic voltage restorer (DVR) in order to mitigate voltage sags in low voltage distribution systems. Carefully chosen three case studies have been realized to verify the operation and performance of the designed system in practical power distribution system in MATLAB/Simulink program. In case (1) Single phase line to ground fault was generated and sag of 50% with 90 phase shift and 80% with 33.60 phase shift on phase A and Phase C was observed respectively. The simulated DVR was found to be capable of compensating for the missing voltages effectively by generating 0.492 pu for phase A & 0.495 pu for phase C. In case (2) the dynamic performance was tested with a three-phase symmetrical short circuit fault which resulted a 60% balanced voltage sag with phase shift of -41.40 on phase A, -450 on phase B and -480 on phase C. The DVR succeeded to protect the load from a 100 ms and 0.6 pu voltage sag by generating 0.708 pu voltage for each phase. In case (3) Simulation of multi stage fault generation block of two stages was carried out. In stage one three phase to ground fault was applied and on all Phases 35% reduction with phase shift of -41.40 was observed. While in stage two single-phase to ground fault was applied to Phase C and 30% with phase shift of -30.60 and 50% with phase shift of 16.20 reduction is observed on Phase B and Phase C respectively. Results of simulation showed that, the DVR was able to produce the required voltage component rapidly in each of the stages and helped to maintain a balanced and constant load voltage at 1 pu.