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This paper discusses the impact of HVDC on Power System Stability and proposes a new type of control mechanism based on Fuzzy set theory to augment dynamic performance of a multi-machine power system. To have good damping characteristics over a wide range of operating conditions, speed deviation (Δω = error1) and acceleration (Δώ = error3), of the machines are chosen as the input signals to the fuzzy controller. These input signals are first characterized by a set of linguistic variables using fuzzy set notations .The fuzzy relation matrix allows a set of fuzzy logic operations that are performed on controller inputs to obtain the desired output. The effectiveness of the proposed controller is demonstrated by a multi-machine system example. The superior performance of this fuzzy controller in comparison to the conventional fixed gain controller proves the efficiency of this new fuzzy PID controller.