UPQC (Unified Power Quality Conditioner) is an advanced custom power device, which can be used in the case that the load is non-linear and the system supply voltage is distorted simultaneously. It consists of a series and shunt Voltage Source Converter (VSC) whit a common DC link. The shunt VSC is mainly intended for conditioning the current flowing from a load into the network and series VSC is mainly used to protect sensitive loads against power quality problems caused by disturbances in supply system. In this paper, a new control strategy for the UPQC is proposed. This control strategy is based on two different methods; the Instantaneous Power Balance Method and Synchronous Reference Frame Method. These two methods have been used earlier independently. Each of them has merits and demerits. To overcome their drawbacks, the instantaneous power balance methods have been applied to the shunt VSC and synchronous reference frame method has been applied to the series VSC of UPQC. The simulation results of UPQC in a typical distribution system, carried out by PSCAD/EMTDC, verify the performance improvement of UPQC. It is shown that using this combination of control strategy, the power quality problems in distribution systems can be solved easily.