Over the recent period of time, power quality problems have been marked as a buzzing issue with regards to promote delicate or miniature power electronic devices where Voltage sag problem is the most frequently occurring as well as detrimental power quality problems. Thus, the purpose of this study is to assuage voltage sag problem using proposed Distribution Static Synchronous Compensator (D-STATCOM). Utility distribution networks, sensitive industrial loads and critical commercial operations suffer from various types of outages and service interruptions which can cost significant financial losses. In developing countries such as India, where the power frequency and many such other determinants of power quality are themselves a serious question. The DSTATCOM is a most effective device which is based on the VSC principle. In this paper DSTATCOM, under different faults is analyzed. The modeling and simulation of the proposed shunt compensator was implemented in MATLAB Simulink environment. Simulation results showed that the proposed shunt compensator was efficient in mitigating voltage sags power system. Keywords: Power Quality, Distribution Static Synchronous Compensator (DSTATCOM), Voltage Source Converter (VSC), MATLAB.