This paper presents the results of a study on the application of the recently developed FACTS device, Static Compensator (STATCOM), for the damping of torsional oscillations that occur in a series compensated sc system. The IEEE first benchmark system is considered for this study. In order to suppress unstable torsional mode oscillations, STATCOM with PI controller to regulate the bus voltage, and with an auxiliary signal derived from the generator speed deviations is employed at the generator terminal. Eigenvalue analysis technique is used for small signal analysis, and optimization of the control system parameters is done through step response studies. In addition, dynamic performance of the nonlinear system with optimized STATCOM controller is evaluated under a three-phase fault. Results from the analytical and digital simulation studies reveal the technical feasibility of using STATCOM for damping of turbine-generator torsional oscillations in series compensated sc systems.