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A new optimal control strategy for Unified Power Quality Conditioners (UPQC) is presented. This strategy is based on feedback linearization. The UPQC consists of both series and shunt converters, where usually the series converter works as a voltage source, and the shunt converter works as a current source. However, it is possible to use the series converter as a current source, and the shunt converter as a voltage source as utilized in this paper. For this scheme, an optimal voltage angle at load terminals in order to minimize the converter losses is proposed. A comparison with the traditional UPQC, where series and shunt converters are considered as voltage and current sources, respectively, is also presented.