The smart grid (SG) is a new scientific progress concept. Residential and commercial colonies and smart homes have many sensitive electrical devices and renewable energy systems (solar and wind). SG is greatly affected by Power Quality (PQ) disturbances. PQ has significant impacts on the low voltage smart grid, such as flicker, voltage sag/swell, and harmonics, causing substantial losses and disrupting the SG system. The smart home resident needs a clean and reliable electric power energy source without any PQ troubles. Dynamic Voltage Restorer (DVR) is a cost-efficient and promising static var device installed in series with transmission and distribution lines to protect PQ disturbances in electrical power systems. This research introduces an idea to improve PQ disturbances in the smart distribution grid (smart home) at the low voltage side using a Low-Cost Two-level inverter DVR. This study will use a two-level inverter topology to integrate with the DVR System to obtain a simple and straightforward Low-Cost Two-level Inverter DVR approach that is easy to use, flexible, and practical. In this research, the proposed DVR was designed and simulated in MATLAB/Simulink, where it shows excellent performance to overcome PQ-related disturbances such as voltage sag/swell, flicker, and harmonics with percentages close to 99%.