The electrical power sector is currently focusing on power quality (PQ) issues and their mitigation. Industrial automation and the use of power electronic converters for the integration of distributed generation create various PQ problems. This necessitates PQ enhancement, which in turn helps to improve the life span of the equipment as well as the reliability of supply for feeding critical loads within the system. This paper presents a comprehensive review of the Unified Power Quality Conditioner (UPQC) and its widespread application in the distribution system. The UPQC belongs to the family of active power filters. It contributes to the alleviation of voltage and current-related PQ issues along with power factor correction and the integration of renewable energy systems in the distribution network. This paper discusses various topologies, compensation methods, control theories, and the technological developments in recent years. More than 160 research papers have summarized the features of UPQC for further applications. Based on the outcomes of the investigation, the future direction of the UPQC is discussed. This paper is expected to play a major role in guiding research scholars in the application of the UPQC.