This paper presents a novel control strategy for the case of 3-phase 3-wire Unified Power-Quality Conditioner (UPQC) based on the concepts of instantaneous active and reactive Power theory. The UPQCs is one of the major custom power solutions capable of mitigating the effect of supply voltage sags / swells, distortion, unbalance voltage at the point of common coupling (PCC) as well as load harmonics, unbalance load and reactive power requirement of load. Using this control strategy harmonic detection, reactive power compensation, voltage sag and swell have been simulated and the results are analyzed. The operation and capability of the proposed system was analyzed through simulations with MATLAB / SIMULINK.