This paper discusses about improving power system stability by employing a Fuzzy Theory based Distributive Power Flow Conditioner (DPFC). The goal of the work presented in this paper is to design an oscillation damping controller aiming at oscillations which has low frequency, thereby embellishing the dynamic stability of a power system. As a derivative of Unified Power Flow Conditioner (UPFC), this device consists of shunt and series controllers that can be installed in a transmission line between the two electrical areas. Single Machine Infinite Bus (SMIB) system is considered for analysis, by employing PI controlled DPFC and Fuzzy controlled DPFC. The complete case study is presented based on MATLAB/Simulink environment by using OPAL-RT 5600 Real-time digital Simulator. The significance of the results are better stability and constant power supply. Case study results showcase the validation of proposed model to improve the system stability by damping the power oscillations.