This paper discusses the operating principles and control characteristics of a dynamic voltage restorer for power quality improvement. The power quality disturbances include voltage sag, swell, notch, spike and transients etc. Dynamic voltage restorer (DVR) proved as a suitable device that deals with power quality disturbances. The DVR is connected in series with the power lines. The design issues of the output LC filter in fuzzy controller based DVR system. The LC output filter system not only could reduce the switching frequency harmonics and improves the system efficiency. The LC filter is also series connected between the converter and the grid. The use of inverter in the DVR would introduce switching harmonics in the grid; therefore, LC filter is proposed to eliminate the high-frequency inverter switching noise and pass through the fundamental component, also could achieve the same performance of damping the switching harmonics using smaller inductance. The fuzzy controller added in the system improves the system performance and the design issues of output LC filter are carried out and realized. © Research India Publications.