In light of the widespread usage of power electronics devices, power quality (PQ) has become an increasingly essential factor. Due to nonlinear characteristics, the power electronic devices produce harmonics and consume lag current from the utility. The UPQC is a device that compensates for harmonics and reactive power while also reducing problems related to voltage and current. In this work, a three-phase, three-wire UPQC is suggested to reduce voltage-sag, voltage-swell, voltage and current harmonics. The UPQC is composed of shunt and series Active Power Filters (APFs) that are controlled utilizing the Unit Vector Template Generation (UVTG) technique. Under nonlinear loads, the suggested UPQC system can be improved PQ at the point of common coupling (PCC) in power distribution networks. The simulation results show that UPQC reduces the effect of supply voltage changes and harmonic currents on the power line under nonlinear loads, where the Total Harmonic Distortion (THD) of load voltages and source currents obtained are less than 5%, according to the IEEE-519 standard.