A nonlinear controller design technique, for the enhancement of power quality and power system stability in a vehicle-to-grid (V2G) system, is proposed in this paper. The dynamical model of a V2G system is first developed and then the controller is designed based on the partial feedback linearization of the developed model. The control scheme is developed in such a way that converters in V2G systems are capable of injecting both active and reactive power into the grid. The implementation of the proposed controller requires the stabilization of internal dynamics of V2G systems as it transforms the system into a partly linear and an autonomous system with internal dynamics. The stability of internal dynamics of V2G systems is also discussed in this paper. Finally, the performance of the proposed control scheme is evaluated on a simple test system in terms of power quality and system stability enhancement. From the simulation result it is found that the designed nonlinear controller provides excellence performance in improving power quality and stability of whole system.