In this paper, in order to investigation the dynamic performance of an Interline Power Flow Controller (IPFC) in enhancing the stability of a power system and in spite of being aware of the strong ability of the Particle Swarm Optimization (PSO) algorithm in finding the global optimum solution of a problem, a novel supplementary controller scheme for the IPFC is considered to be designed. With due attention to the simplicity and availability of the decentralized output feedback control methodology, it is take into account to be optimally designed using the PSO algorithm. For this purpose, the linearized Heffron-Phillips model of a Single-Machine Infinite Bus (SMIB) system is established and the Integral of Time multiplied Absolute value of Error (ITAE) is applied as an objective function to design an output feedback controller in order to evaluate the potential of various IPFC control signals upon the power system's different operating conditions. The results in time-domain simulation analysis reveal that the designed PSO based IPFC controller tuned by the proposed objective function has an excellent capability in damping power system low frequency oscillations and enhance greatly the dynamic stability of the power systems. Moreover, through analyzing some performance indices, it is obvious that the m1 (magnitude of injected voltage) based controller is superior to the other based controller.