Abstarct: Due to increase in solidarity of modern electric systems and rapid development of load demands in many parts of power systems, it is of vital importance to optimally utilize the existing system sources and capacities with an essential level of reliability along with keeping the system in its stability limits. To do so, using Flexible AC Transmission Systems (FACTS) devices is recommended as one of the best ways to increase both reliability and practical capacity of transmission lines. Unified Power Flow Controller (UPFC) is one of the most recent members of these devices, which consists of two voltage-source converters with a large capacitor connecting them. The aim of this thesis is to replace the two converters and the large capacitor with a dual-bridge matrix converter which results in considerable decrease in UPFC’s cost and volume. Space Vector Pulse Width Modulation (SVPWM) method is used to control the matrix converter which is capable of producing nearly sinusoidal waveforms at unity input power factor. A detailed model of UPFC with matrix converter connected to a simple power system is proposed and its control strategy is described in order to control real and reactive power flow through the sending and receiving-end buses of the system with and without load. Simulation results show that this control strategy is highly capable of driving the newly-structured UPFC in independent control of real and reactive power flow in both sending and receiving-end buses within their reference values.