Modern power systems operate much closer to their stability limits than before. With the introduction of highly sensitive industrial and residential loads, the loss of system stability becomes increasingly costly. Reinforcing the power grid by installing additional transmission lines, creating more complicated meshed networks and increasing the voltage level are among the effective, yet expensive solutions. An alternative approach is to improve the performance of the existing power system components by incorporating more intelligent control techniques. This can be achieved in two ways: introducing intelligent local controllers for the existing components in the power network in order to employ their utmost capabilities, and implementing global intelligent schemes for optimizing the performance of multiple local controllers based on an objective function associated with the overall performance of the power system. Both these aspects are investigated in this thesis. In the first section, artificial neural networks are adopted for designing an optimal nonlinear controller for a static compensator (STATCOM) connected to a multimachine power system. The neurocontroller implementation is based on the adaptive critic designs (ACD) technique and provides an optimal control policy over the infinite horizon time of the problem. The ACD based neurocontroller outperforms a conventional controller both in terms of improving the power system dynamic stability and reducing the control effort required. The second section investigates the further improvement of the power system behavior by introducing an ACD based neurocontroller for hierarchical control of a multimachine power system. The proposed wide area controller improves the power system dynamic stability by generating optimal control signals as auxiliary reference signals for the synchronous generators automatic voltage regulators and the STATCOM line voltage controller. This multilevel hierarchical control scheme forces the different controllers throughout the power system to optimally respond to any fault or disturbance by reducing a predefined cost function associated with the power system performance.