Ac system strength indicated by short circuit ratio (SCR) and its impact on commutation failure in HVDC transmission system are studied. SCR is varying along with ac system operation mode, grid configuration, load characteristics and reactive power compensation devices at inverter station. Quasi-steady state calculations show that SCR increases commutation reactance and consequently increases the overlap angle of the inverter. Commutation failure occurs when inverter extinction angle is less than the minimum critical Value. Digital Simulation of a twoterminal HVDC transmission system using Matlab/Simulink program is presented. HVDC controllers are simulated and Voltage Dependent Current Limits (VDCL) function is added to increase the system stability.