With the development of electric power technology, computer technology and control technology, the Flexible AC Transmission System (FACTS) appears which supply some new means to raise transmission capacity and improve power system stability. The static Var compensator (SVC) which is one of FACTS is an effective device to improve system performance, which has been proved. In recent years, the static Var compensator (SVC) is used extensively. Therefore, the effect of static Var compensator on power system is analyzed deeply. Some functions are elaborated in detail, such as raising transmission capacity, improving power system stability, strengthening system damping, relieving system sub-synchronous oscillation, preventing the voltage fluctuation, and optimizing HVDC transmission system performance.