Abstract This paper presents the analysis and design of a three phase four wire Dynamic Voltage Restorer (DVR) based on supercapacitor as energy storage for power quality improvement in electrical distribution system. The proposed system comprises of a supercapacitor as energy storage, DC–DC converter, and the power circuit of the DVR. It involves the construction of the proposed DVR topologies consists of filtering scheme, isolation or distribution transformer, injection transformer and Voltage Source Inverter (VSI). The main aims of this paper covers design, modeling, construction and testing of a laboratory DVR prototype for a three phase four wire system. This system is capable to mitigate voltage disturbances at low voltage distribution system. The implementation of supercapacitor as an energy storage is to supply real power to the inverter during disturbances. The experimental results of the prototype were also illustrated. The controllers based on d–q–0 transformation technique and Proportional Integral (PI) was applied to the DVR. The proposed controller was then coded into a digital signal processor (DSP) TMS320F2812 board. The proposed system is verified through simulation and is implemented in a prototype, and the experimental results are compared.