In this paper, a two-stage AC-AC power supply is designed to specifically handle the operation and performance improvements of the power system with highly inductive loads. The proposed power supply scheme includes an input interleaved power factor correction (PFC) stage to improve the input power factor (PF) and regulate the DC bus voltage required for the second stage, which is a voltage source inverter (VSI) with an output low pass filter to adjust the load harmonics contents and regulate the load voltage and frequency to the specified AC load values. The small-signal models of the PFC and VSI stages are obtained, and optimal voltage and current control loops for both stages are designed based on the obtained models to improve the required system power performance and stability. PSIM simulation is used to examine the performance of the proposed power supply under various input-output operation conditions. This work achieves a 500VA, (180-260)V RMS Power supply with an input PF of 99%, better output voltage regulation, and a lower THD value for the purpose of supplying industrial inductive loads.