The theory and modeling of Unified Power Quality Conditioner(UPQC), a FACTS device, is described in this paper. The UPQC proposedin this paper consists of thyristor controlled capacitor banks, series-active filter and shunt-active filter. The series-active and shunt-active filters are developed mainly to compensate negative-sequence current and harmonics as the thyristor controlled capacitor banks is used to compensate the reactive power of power frequency. The functions of the models have been verified. Compensations as well with and without the active filters are discussed in this paper. Some results and corresponding conclusions are presented.