This paper describes the detailed results of a combined operation of the unified power quality conditioner with the distributed generation. The components of the system are a shunt inverter, series inverter, and a distributed generator. A rectifier is used to connect generator to the dc link. The voltage swell, voltage sag, reactive power, harmonics and voltage interruption in islanded mode and interconnected mode can be compensated with this. The major use of unified power quality conditioner (UPQC) is to influence the system and mitigate the unnatural disturbance that cause imbalance in the performance of the load. UPQC has the ability to compensate the reactive power, harmonic current, he voltage disturbances. It also maintains the power flow control. UPQC has no means as such in voltage compensation the voltage interruption because there is no means of energy storage. The combined operation of the unified power quality conditioner with distributed generation is identified as an effective measure to mitigate the voltage interruption. The performance of proposed system was analyzed using simulations in a Matlab environment. On power distribution systems or power systems of industries the proposed system can improve the power quality at the point of installation.