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Unified Power Quality Conditioner (UPQC) device combines a shunt active filter together with a series active filter in a back-to-back configuration, to simultaneously compensate the supply voltage and the load current. The Three phase four wire system is realized from a three phase three wire system. In three phases, four wire system electrical loads are connected from line to neutral of the three phases. Neutral current in three-phase power systems is often thought to be only the result of the imbalance of the phase currents. Unbalance is a serious power quality problem, mainly affecting low-voltage distribution systems, as for instance encountered in office buildings with abundant PCs and lighting. In an ideal balanced sinusoidal three-phase power system, the neutral current is the vector sum of the three phase currents, should be equal to zero. Under normal operating condition, some phase unbalance occurs resulting in a small neutral current. A new control strategy to balance the unbalanced load currents is presented. The neutral current that may ow towards transformer neutral point is compensated by using a four-leg voltage source inverter topology in shunt part of the inverter. Hysteresis controller is mainly used to control the gating pulses of the inverter. The series transformer neutral will be at virtual zero potential during all operating conditions. The simulation results based on MAT-LAB/Simulink are presented to show the effectiveness of the proposed UPQC-based three phases four wire distribution system. [ABSTRACT FROM AUTHOR]