Abstarct: Wind farms have been increasingly integrated into power systems over the decades because of the global energy crisis and the pressure on environmental protection. Nowadays, the installation of wind power energy has moved from small wind farms with a few wind turbines to large wind farms with more than hundreds of MW of capacity. Accordingly, the installation voltage level has been increased from low voltage to high voltage. With increase in the penetration level of the wind farms, the effect of the wind farm on the dynamic of the power system has been extensively increased. Given these backgrounds, a comprehensive investigation on the impacts of wind farms on power system stability are undertaken in this thesis considering stable penetrations of wind farms into power systems. In this thesis firstly, the modeling of power system, doubly fed induction generator (DFIG) wind turbine, and control strategy for the DFIG are described. After that, a power oscillation damping (POD) is designed for DFIG which aims to increase the damping of inter area oscillations. In the simulation part, a two-area four-machine power system for two case of with and without wind farm are studied and the effects of several factors, including the DFIG transmission distance and DFIG capacity, on the low frequency oscillations characteristics of the interconnected two area power system are studied. The test system is simulated in DigSILENT Power Factory environment and modal analysis and dynamic time domain simulations have been carried out. The simulation results analysis show that with increasing DFIG transmission distance, the damping of low frequency oscillations is decreased. Also the results indicate that with increasing DFIG capacity, the damping of low frequency oscillations is increased. In addition, the results show that the POD improves the damping of inter area oscillations.