Low frequency oscillation is an important issue for interconnected electric power systems. The inter-area low frequency oscillation is analyzed from the point of view of transient energy, and the principle of UPFC damping inter-area low frequency oscillation is analyzed aiming at transient energy descending. Then a UPFC fuzzy sliding mode controller for damping inter-area low frequency oscillation is designed. The switching function of this controller is structured with area tie-line electrical quantities, and the control signal is outputted by fuzzy controller, which can control the series voltage of UPFC to damp low frequency. The fuzzy sliding mode control method combines the advantages of both sliding mode control and fuzzy control, and its effectiveness is verified by the simulation result of two-area four-machine power system.