This paper proposes a dual-function dynamic voltage restorer (DFDVR) with fault current-limiting capability. The new topology can operate under different modes: the short-circuit fault current-limiting mode and the compensation mode for voltage fluctuation. Different functions of the DFDVR are achieved by controlling a brake chopper circuit and anti-parallel thyristors. During fault conditions, the anti-parallel thyristors are deactivated to protect the DC-side capacitor, and the duration of the on- and off-periods of the semiconductor switch in the brake chopper circuit are controlled to adjust fault current amplitudes. During voltage sags, the anti-parallel thyristors are activated, and the brake chopper circuit is turned off by controlling the gate turn-off thyristor (GTO) in the brake chopper circuit, thus making the DFDVR similar to a conventional DVR. The control scheme and optimal parameter selection of the DFDVR are provided. The design methodology of the DFDVR was verified through simulations performed using the PSCAD/EMTDC software. The experimental results prove the capability and effectiveness of the DFDVR topology.