In this study, the performance of supplementary stabilizer for static synchronous compensator (STATCOM) tuned based on simulated annealing in order to improvement of dynamic stability is studied. Since STATCOM is usually used for damping Low Frequency Oscillations (LFO), a supplementary stabilizer is incorporated with STATCOM to reach the mentioned purpose. Simulated annealing (SA) as a heuristic optimization technique is used for tuning the parameters of the STATCOM supplementary stabilizer. The IEEE 14 bus test system is considered for achieving simulation results .In order to show the ability of SA-based STATCOM to damp LFO, the system responses in case with and without STATCOM are compared. Also two different operation conditions i.e. normal and heavy have been considered for better examination of SA-based STATCOM performance. Several nonlinear time-domain simulation tests visibly show the ability of STATCOM in damping of power system oscillations and consequently stability enhancement.