The problem of voltage sags and Swells and its severe impact on sensitive loads is well known. To solve this problem, custom power devices are used. One of those devices is the Dynamic Voltage Restorer (DVR), which is one of the most efficient and effective modern custom power devices used in power distribution networks. This paper described DVR principles and voltage correction methods for balanced and/or unbalanced voltage sags and swells in a distribution system. Simulation results were presented to illustrate and understand the performances of DVR under voltage sags/swells conditions. The results obtained by simulation using MATLAB confirmed the effectiveness of this device in compensating voltage sags and swells with very fast response (relative to voltage sag/swell time).