Static Synchronous Compensator (STATCOM) is a Shunt active FACTS controller when connected at the mid point of the transmission line, it can improve voltage regulation, power flow and stability of the transmission systems. This paper analyzes the use of STATCOM with discrete control to improve the transient stability of power system. During transient period STATCOM is switched between inductive or capacitive or operating value and the reference value of reactive current is obtained from Fuzzy Logic based Discrete Controller (FLDC). The Fuzzy logic discrete controller is based on energy function. Transient simulation is carried out to analyze the system. The results of the case study system adapted from IEEE First Benchmark Model demonstrate the effectiveness of Fuzzy logic discrete controller in stabilizing the rotor angle oscillation. Linear analysis is performed on D-Q model of the system with STATCOM. © 2014 IEEE.