This paper presents a single-phase line interactive uninterruptible power supply (UPS) system, allowing output voltage conditioning, such as voltage harmonic suppression and sag or swell compensation. Additionally, the UPS input current is also conditioned, allowing current harmonic suppression and reactive power compensation. In other words, the UPS system acts as a true unified power quality conditioner (UPQC), when it is working in standby operation mode. Both voltage and current sinusoidal UPS references are generated by using a phase-locked loop (PLL) combined with a self-tuning filter (STF), allowing the implementation of a simplified control strategy, in which by controlling the UPS dc-bus voltage, is possible to control the amplitude of the sinusoidal reference current of the series converter and, consequently, the power flow through the UPS. The power rate handled by both series and parallel PWM converters depends on the operation conditions of the UPS system, such as, among others, the amplitude difference between the input and output voltages. In standby mode, the amplitude of the UPS output voltage can vary in order to follow the amplitude of the input voltage within a limited range defined by design requirements. This strategy will allow an effective optimization of the UPS system efficiency. Mathematical analyses and validation results are presented in order to evaluate the performance of the line interactive UPS system.