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This paper introduces a novel method for the mitigation of the voltage sag and voltage flicker by using Kalman filter and its derivatives (adaptive, and extended). The Kalman filter is used as a tool to extract both the instantaneous envelope of the voltage sags, and to extract the Instantaneous Flicker Level (IFL) of the voltage flicker. Also, this paper demonstrates the advantages of using the Kalman filter instead of the existing tools for tracking and extracting voltage disturbances. Digital simulation results are presented to illustrate the mitigation of unbalanced voltage sags, and the compensation of the cyclic and noncyclic voltage flicker by employing the proposed algorithm.