An optimization approach for two-area power system with Unified Power Flow Controller (UPFC) is proposed in this paper. The proposed method is the Atomic Orbital Search (AOS) approach. The proposed approach is applied to achieve full utilization of UPFC and keeps the parameters uncertain. The multivariable PI controller is utilized to control the system controller and eliminates the negative interaction of the controllers. The proposed approach combines the two subsystems by converting algebraic subsystem using differential approximation, which leads to a nonlinear system. The proposed approach provides efficient voltage regulation and quicker damping of inter-area mode oscillations. The proposed UPFC controller eliminates generator oscillation and fault condition, which guarantee the stability of the system as well as provides dynamic power flow control under the tie-line. At last, the proposed method is simulated on MATLAB platform and compared with existing methods. From this comparison, it is shown that the proposed approach provides less oscillation than the existing approach.