This paper proposes a simplified and efficient control scheme for Unified Power Quality Conditioner (UPQC) based on three-level (NPC) inverter capable to mitigate source current harmonics and compensate all voltage disturbances perturbations such us, voltage sags, swells, unbalances and harmonics. The UPQC is designed by the integration of series and shunt active filters (AFs) sharing a common dc bus capacitor. The dc voltage is maintained constant using proportional integral voltage controller. The shunt and series AF are designed using a three-phase three-level (NPC) inverter. The synchronous reference frame (SRF) theory is used to get the reference signals for shunt and the power reactive theory (PQ) for a series APFs. The reference signals for the shunt and series APF are derived from the control algorithm and sensed signals are injected in tow controllers to generate switching signals for series and shunt APFs. The performance of proposed UPQC system is evaluated in terms of power factor correction and mitigation of voltage, current harmonics and all voltage disturbances compensation in three-phase, three-wire power system using MATLAB-Simulink software and SimPowerSystem Toolbox. The simulation results demonstrate that the proposed UPQC system can improve the power quality at the common connection point of the non-linear load.