In this paper, a novel reference generation method based on Improved Synchronous Reference Frame (ISRF) is presented for Dynamic Voltage Restorer (DVR). This method is applicable for both single phase and three phase systems in order to compensate unbalanced voltage sag/swell and unbalanced voltage harmonics at the same time. To reduce the drawbacks of Conventional SRF and Symmetrical components based SRF (SCSRF), ISRF is proposed in this paper for compensation of unbalanced voltage sag/swell and harmonics. In this paper, the compensation of 50% voltage sag and 25% voltage swell is performed in addition to unbalanced voltage harmonics. Performance results of proposed method show good robustness and faster detection for balanced/unbalanced voltage sag/swell/harmonics compared with SCSRF. By the proposed method, total harmonic distortion is reduced to values which are fairly less than the limits defined in IEEE 519 Standards. (C) 2016 Elsevier B.V. All rights reserved.