In this paper, the inter-area low-frequency oscillations are restrained in the interconnected power system by making use of the delay-dependent wide-area dynamic output feedback controller (DOFC). Modal analysis is adopted to obtain the modes of inter-area oscillation to be controlled and the Schur truncation model reduction technique is represented to reduce the order of the power system. The augmented closed-loop system model, where the transmission delay and packet loss of wide-area signals are considered, is established. The sufficient conditions of exponentially mean-square stable are obtained according to Lyapunov’s stability theory. Finally, case studies are carried out on a two-area four-machine power system, where our proposed controller, a conventional controller, and the wide-area damping controller in the existing references are installed, respectively. The simulation results under different external disturbances, packet loss rates, and delays are presented to show the effectiveness and advantages of our proposed controller.