In this paper, a new control algorithm for the dynamic voltage restorer (DVR) is proposed to regulate the load terminal voltage during various power quality problems that include sag, swell, harmonics and unbalance in the voltage at the point of common coupling (PCC). The proposed control strategy is an Adaline (Adaptive linear element) Artificial Neural Network (ANN) and is used to control a capacitor supported DVR for power quality improvement. A capacitor supported DVR does not need any active power during steady state because the voltage injected is in quadrature with the feeder current. The control of the DVR is implemented through derived reference load terminal voltages. The proposed control strategy is validated through extensive simulation studies using the MATLAB software with its Simulink and SimPower System (SPS) toolboxes. The DVR is found suitable to support its dc bus voltage through the control under various disturbances.