The power system network is becoming dense and much more complex. Dynamic and continuous monitoring of the power system network is required to avoid power outages. Phasor Measurement Unit (PMU) is one such device that provides state estimation parameters of dynamic power system networks that are used for designing relays and controlling the system network. Power Quality problems such as voltage sags and swells can damage the sensitive load and cause abnormal voltage, current, and frequency conditions in a power system network. Fast and major developments in power electronics technology have made it possible to mitigate the power quality problems. Dynamic Voltage Restorer (DVR) is a voltage sag compensation device that compensates the difference in voltage avoiding interruptions and restores the voltage to the pre-fault value. This paper discusses a technique used for monitoring, protecting, and controlling the system under fault condition using PMU and compensate voltage sag for a sensitive load using DVR based on the data collected by placing PMU in an optimal location. The outcome of the above analysis is recorded which shows that effective monitoring, controlling, and voltage sag compensation can be done with less number of PMU’s placed optimally in conjunction with DVR.