The unified power quality conditioner (UPQC) is a custom power device, which mitigates voltage and current-related PQ issues in the power distribution systems. In this paper, a UPQC topology for applications with non-stiff source is proposed. The proposed topology enables UPQC to have a reduced dc-link voltage without compromising its compensation capability. This proposed topology also helps to match the dc-link voltage requirement of the shunt and series active filters of the UPQC. The topology uses a capacitor in series with the interfacing inductor of the shunt active filter, and the system neutral is connected to the negative terminal of the dc-link voltage to avoid the requirement of the fourth leg in the voltage source inverter (VSI) of the shunt active filter. The average switching frequency of the switches in the VSI also reduces, consequently the switching losses in the inverters reduce. Detailed design aspects of the series capacitor and VSI parameters have been discussed in the paper. A simulation study of the proposed topology has been carried out using PSCAD simulator, and the results are presented. Experimental studies are carried out on three-phase UPQC prototype to verify the proposed topology. © 1982-2012 IEEE.