This paper discusses voltage swell or overvoltage compensation problem in a diode rectifier supported transformerless dynamic voltage restorer (DVR). When swell or overvoltage happens, applying in-phase or phase-invariant voltage injection scheme introduces DC-link voltage rapid rise, which endangers storage capacitor and switching devices. The traditional minimum energy compensation scheme still cannot solve unbalanced situation. Based on this reason, a novel control algorithm including DVR compensation limit consideration is proposed. Simulation results are presented to prove the accuracy and rationality of the proposed control algorithm.