This paper proposes a new type of voltage sag-swell compensator based on a Z-source AC-AC converter. The proposed topology employs a pulse width modulation (PWM) Z-source AC-AC converter along with a injection transformer. A safe commutation strategy is used to eliminate voltage spikes on switches without snubber circuit. During a voltage sag or swell, the proposed system controls the adding or missing voltage and maintains the rated voltage of sinusoidal waveform at the terminals of the critical loads. The proposed system is able to compensate 20[%] voltage swell and is also able to compensate 60[%] voltage sag. In order to control and detect the voltage sag and swell, the peak voltage detection method is applied. Also, the operating principles of the proposed system are described, and a circuit analysis is provided. Finally, PSIM simulation and experimental results are presented to verify the proposed concept and theoretical analysis.