In this paper a technical review of the integration of a Unified Power Quality Conditioner (UPQC) in a distributed generation network is presented. Although the primary task of UPQC is to minimize grid voltage and load current disturbances along with reactive and harmonic power compensation, additional functionalities such as compensation of voltage interruption and active power transfer to the load and grid have also been identified. Connection methodologies with their advantages and disadvantages are also described. Recent improvements in capacity expansion techniques and future trends for the application of UPQC in distributed modes are also identified