This paper deals with an investigation on the effectiveness of integrated Statcom-Fuel cells in improving the transient stability of power systems. In this paper, a voltage source inverter based Statcom is used to alleviate the transient stability issues. In order to increase the real power compensation capability of the Statcom, it is integrated with fuel cells. Fuel cells are known for providing reliable back up power, though, they do not respond quickly to unexpected changes. An effectual hybrid control algorithm is used to compensate for the energy oscillations that occur due to unexpected changes, compensate for the slow response of fuel cells, and hence to improve transient stability of the system. The control scheme uses a two-layer neuro-fuzzy PI controller which is a function based Takagi-Sugeno-Kang fuzzy model. In order to circumvent the recurring computation of controller parameters at different operating conditions, a modified PSO algorithm is used. The efficacy of the proposed approach is assessed in a multimachine transmission system using MATLAB simulation under various transient disturbances and operating conditions. The results are compared with that of an integrated Statcom-BESS. Explorations reveal that the transient stability is amazingly improved with the incorporation of an integrated fuel cell system. © 2015 Hydrogen Energy Publications, LLC.