Rapid growth of nonlinear loads leads to lots of power quality problems such as harmonics, unbalance operation and excessive source-end neutral current in three-phase supplying networks. This paper proposes an combined Photovoltaic (PV) Unified Power Quality Controller (UPQC) for compensation of source voltage deficiencies (e.g. sag and swell). Meanwhile, considering the Advanced Generalized Theory of Instantaneous Power (A-GTIP) algorithm, the proposed UPQC leads to suppress grid-end current harmonics caused by the distorted unbalanced load-terminal voltages. Hence, the grid-end currents could remain purely sinusoidal. Additionally, using combined UPQC and PV system there will be capital investment savings since one less converter will be used in comparison with separated UPQC and PV. In this paper a new Maximum Power Point Tracking (MPPT) algorithm is also proposed to efficiently improve the performance of the solar panels. The proposed algorithm is composed of two parts, set point calculation and fine tuning. The set point calculation part, based on the short circuit current method, first approximates maximum power. Second, exact amount of the maximum power will be tracked by the fine tuning part which is based on the perturbation and observation method (P&O). Then, output of the MPPT circuit would be connected to the DC side of the AUPQC. Matlab/Simulink simulations verify the performance of the proposed PV-UPQC performance. (c) 2012 Elsevier Ltd. All rights reserved.