Stability of a power system is vital for its reliable operation and maintaining system stability has been a big challenge for engineers over the years. One way of improving system stability is the use of power system stabiliser (PSS). Its main function is to add damping to the generator rotor oscillation by modulating the generator excitation so as to develop a component of electrical torque in phase with the rotor speed deviation. In Ghana, two power stations have their generators equipped with PSS but none of the PSS are activated. The main objective of this study is to assess how the stability of the power system of Ghana can be improved by activating the power system stabilizers (PSS) on the excitation system of some of the generating units. To effectively perform the study the following questions had to be answered. To what extent will the activation of the PSS on some generating units affect the overall system dynamic performance? Where in the power system should the PSS be activated? To what extend can the PSS reduces system oscillation?  What improvement can be made to the power system to optimise the performance of the PSS?Data of Ghana and the interconnected systems were first collected, reviewed and all the systems were modelled using PSSE program. Steady state stability studies were then performed to identify the inadequacy in the system during steady state operations. Five base cases including peak and average load condition with and without contingency were used for this study. Dynamic stability studies were also carried out by selecting appropriate dynamic models for generators, exciters and governors that best fit the dynamic behaviour of the generating units in the PSSE program. Appropriate PSS models were selected for units equipped with PSS based on manufacturers recommendation. Series of dynamic simulations were carried out to identify the best location and parameter settings for the PSS. Small signal stability studies were also carried out to complement the results obtained from the transient studies using NEVA. There was however a defect in the NEVA program and full results could not be obtained.In conclusion, Ghana s system is likely to experience voltage collapse during a transmission outage on some critical lines at peak period unless some loads are shed. This risk can be reduced by improving the power factor to 0.95 using more reactive power compensating devices (capacitor bank) at the local substation. Transient stability results also show that the best location for the PSS to effectively damped oscillation is Akosombo GS. Inter-area oscillations of 0.5Hz between Ghana and Ivory Coast systems, local-area oscillation of 0.8Hz between the Akosombo units and Aboadze units in Ghana, were effectively damped within 7sec with PSS at Akosombo GS. It is highly recommended that PSS at Akosombo generation station be activated since their application has a positive impact on the dynamic performance of Ghana s system. Steady state stability be improved by correcting the power factor at the local stations and line relay settings reviewed to accommodate the present operating condition. It is also recommended that the PSS be coordinated effectively with the protection and control devices for optimal performanc