This paper deals with the terminology and various issues about power quality problems. This problem occurs owing to voltage sag, swell, harmonics, and surges. The sustained overvoltage and undervoltage originated from power system may often damage/or disrupt computerized process. Voltage sags and harmonics disturb the power quality and this can be overcome by custom power device called dynamic voltage restorer (DVR). The DVR is normally installed between the source voltage and critical or sensitive load. The vital role of DVR depends on the efficiency of the control technique involved in switching circuit of the inverter. In this paper, Combination of improved grade algorithm with fuzzy membership function is used to decide the Proportional-Integral coefficients. The DVR works well both in balanced and unbalanced conditions of voltages. The simulation results show the efficiency of the proposed method.