Dynamic voltage restorer (DVR) is a practical and economical solution for solving voltage quality issues in the electrical utility. Voltage quality problems in the form of deep voltage sag, three-phase unbalance, voltage harmonics and long swell duration can cause severe process disruptions and result in substantial economic and data losses. DVR can protect the critical loads from the supply-side voltage disturbances other than outages. It works by inserting a voltage of desired magnitude and phase angle, in order to restore the load-side voltage to be balanced, sinusoidal and at nominal value even when the source voltage is unbalanced or distorted. In addition, DVR can compensate both steady-state and dynamic voltage problems and it is capable of generating or absorbing real and reactive power at its ac terminals. In this thesis, researches are mainly focused on the three-phase four-wire diode-bridge rectifier supported transformerless-coupled DVR system. One drawback of this system configuration is the unidirectional power flow. Under voltage swell or overvoltage compensation, the DC-link voltage may continuously rise using the three conventional voltage injection schemes, in-phase, phase-invariant and minimum energy, which are studied and analyzed deeply. And a novel control method, which called unidirectional power flow control algorithm is proposed, which aims to solve the voltage swell and overvoltage compensation problems. Based on the DVR block diagram model, its stability, harmonics compensation capability, load adaptability and response time are investigated and analyzed in per-unit system, which demonstrate a stable and good compensating feature. Using the per-unit system to design, those system parameters can be applied to other capacity and base voltage systems conveniently and also in a more general manner than the physical unit system. This work can also act as a design reference for constructing different capacities DVR system. The thesis work is also a new attempt to obtain a more complete stability study of the DVR system, in which most of the past research works only focus on the system stability without load consideration. The system configuration and digital control system details of the DVR experimental prototype is introduced. Based on the D.S.P., the proposed unidirectional power flow control algorithm can be implemented by the digital controller. With the unidirectional power flow control method, the experimental prototype has the ability to compensate the balanced and unbalanced voltage swell or overvoltage effectively, efficiently and safely. Finally, based on the experiments of the system, the proposed control algorithm is proved to be valid, and also shows its superior voltage swell and overvoltage compensation performance to the three conventional voltage injection schemes. Key words: DC-link, Dynamic Voltage Restorer (DVR), voltage quality, unidirectional power flow control algorithm