Electrical power system is an interconnection of various elements comprising non-linear elements, electrical parts and mechanical parts making it more complex. Power system shifts to the state of instability when its eigenvalues shifts to the right side of s-plane. The point where the system eigenvalues shifts from left to right side of s-plane can be identified by existence of imaginary eigenvalues. This is known as saddle node bifurcations or Hopf bifurcation. The power system exhibits undamped oscillations in this condition. This condition is used for effective tuning of stabilizers. Conventional Power System Stabilizer (CPSS) parameters are tuned to stabilize the power system. The lack of robustness of CPSS has gained interest towards the development of new power system stabilizers for improving the stability of power system over wide range of operating condition. In this paper a Fuzzy PID stabilizer is presented to improve the stability of power system. To accomplish the best damping characteristics deviation in speed (Δω), deviation of speed derivative (Δω) and power angle (Δδ) are taken as input to type-2 fuzzy logic controller. The proposed controller is implemented in small signal model of power system. The performance of the proposed controller is tested over different operating conditions. The efficacy of the proposed controller is compared with Convectional Power System Stabilizer.