This paper proposes a new connection for a unified power quality conditioner (UPQC) to improve the power quality of two feeders in a distribution system. A UPQC consists of a series voltage-source converter (VSC) and a shunt VSC both joined together by a common dc bus. It is demonstrated how this device is connected between two independent feeders to regulate the bus voltage of one of the feeders while regulating the voltage across a sensitive load in the other feeder. Since the UPQC is connected between two different feeders (lines), this connection of the UPQC will be called an interline UPQC (IUPQC). The structure, control and capability of the IUPQC are discussed in this paper. The efficacy of the proposed configuration has been verified through simulation studies using PSCAD/EMTDC