Abstract: This study proposes a combined operation of the Unified Power Quality Conditioner (UPQC) with wind power generation system considering investment cost. The proposed system consists of a series inverter, a shunt inverter and an induction generator connected in the DC link through a converter. The proposed system can compensate voltage sag and swell, voltage interruption, harmonics and reactive power in both interconnected mode and islanding mode. The speed of the induction generator is controlled according to the variation of the wind speed in order to produce the maximum output power. The investment cost of proposed system is compared with investment cost of separated use of UPQC and Wind Energy Conversion System (WECS) and the economic saving due to use of proposed system is estimated. The validity of the proposed system is verified by the results of computer simulation.