Modern power systems consist of several generators working synchronously to meet the Power demand. For reliability of these systems, stability must be ensured in case of faults within the system. Faults within a system induce electromechanical oscillations of the electrical generators. These oscillations, also called power swings, must be effectively damped to maintain the system stability. In an attempt to reduce system oscillations, Power System Stabilizers (PSS) are used to add damping by controlling the excitation system. Studies have shown that a well-tuned PSS can effectively improve power system dynamic stability. The paper demonstrates how the Fuzzy Logic Controller can be used to fine tune the PSS and thus improve the overall stability of a power system. Simulations have been carried out on 16 bus test system found in literature. The model was simulated in the MATLAB/SIMULINK environment. A comparison is carried out on a generator without a PSS, with a PSS and with a PSS plus a Fuzzy Logic Controller. The results indicate that the inclusion of a Fuzzy Logic Controller improves the damping of the electromechanical oscillations introduced by a three phase fault in the system, and hence Improves the overall stability of the system.