The Unified Power Quality Conditioner (UPQC) is a versatile device which could function as series active filter and shunt active filter. UPQC can simultaneously fulfill different objectives like, maintaining a balanced sinusoidal (harmonic free) nominal voltage at the load bus, eliminating harmonics in the source currents, load balancing and power factor correction. Keeping the cost effectiveness of UPQC, it is desirable to have a minimum VA loading of the UPQC, for a given system without compromising compensation capability. Hence, a methodology has been proposed in this work to minimize VA loading of UPQC considering the effects of source voltage and load current distortion. The series active filter of UPQC can be made to inject voltages in such a way that a minimum VA loading of UPQC is possible. The optimal angle at which series voltage has to be injected so as to have minimum VA loading of UPQC is computed by Particle Swarm Optimization (PSO) technique. The proposed method has been validated through detailed simulation studies. The VA loading without optimization and with optimization has been compared.