For a power transfer path, total transfer capability (TTC) represents maximum power that can be transferred over the transmission system. Unified power flow controller (UPFC) is a device that can be used to increase in TTC. This study presents a new method for optimal UPFC application to minimise power loss while enhancing TTC. Based on UPFC injection model, the solution region of UPFC parameters is first found using the proposed method to maximise TTC. It then searches the solution region to find optimal UPFC control mode and setting to minimise system power loss. The proposed method is applied to the IEEE-Reliability Test System and the UPFC application impact are evaluated. Comparative studies are conducted between the TTC results obtained by the proposed method with those obtained using the existing approaches.Nomenclature P PI , P SI active power of parallel and series inverters Q PI , Q SI reactive power of parallel and series inverters P P , Q P active and reactive power injection at PB P PB , P SB active power at PB and SB buses Q PB , Q SB reactive power at PB and SB buses V d UPFC series injected voltage with magnitude and phase angle V d of and θ d V PB PB bus voltage with magnitude and phase angle of V PB and θ PB V SB SB bus voltage with magnitude and phase angle of V SB and θ SB V PI voltage of parallel inverter with magnitude and phase angle of V PI and θ PI V SI voltage of series inverter with magnitude and phase angle of V SI and θ SI I SI , I PI current of the series and parallel inverter I PB , I SB current of PB and SB X PT , X ST reactance of parallel and series transformers V Max I maximum output voltage of the inverters I Max I maximum output current of the inverters S Max