Introduction. Nowadays, power quality issues are of considerable interest to both utilities and end users as they cause significant financial losses to the industrial customers. Due to this, power quality assurance in power distribution systems is very important, when considering commercial and industrial applications. Problem Statement. Unfortunately, sudden faults such as sag, transients, harmonics distortion and notching in the power system create disturbances and affect the load voltages. Out of these, voltage sag and harmonics seriously affect sensitive devices. Harmonics in the power system cause increased heating of equipment and conductors, misfires in variable speed drives, and torque pulsations in motors. Harmonics reduction is considered desirable. Methodology. This paper presents an efficient and robust solution to this problem by using dynamic voltage restorer in series with distribution system. Dynamic voltage restorer is economical and effective solution for protecting sensitive loads from harmonics and sag. Control strategy is adopted with dynamic voltage restorer topology and the performance with the proposed controller is analyzed. Novelty. In this research work modelling, analysis and simulation of dynamic voltage restorer with proportional integral controller and dynamic voltage restorer with sliding-mode controller at optimal voltage is used to improve the dynamic voltage restorer performance by reducing total harmonic distortion. Results. The simulation is performed in MATLAB / Simulink software package and comparative analysis of dynamic voltage restorer with different controllers for distribution system is presented. The proposed scheme successfully reduced percentage total harmonics distortion and voltage sag using dynamic voltage restorer with sliding mode controller at optimal voltage which is found to be 0.38 %.