Grid voltage sags are considered to be a critical problem in power distribution system with high penetration of renewable energy resources. These voltage sags propagate through conventional power transformers (CPTs) and affect the normal operation of loads, distributed generating (DG) sources and thereby decreasing the overall reliability of the system. In this paper, a flexible and coordinated control scheme for smart transformer (ST) is proposed to regulate voltage at the medium voltage (MV) grid during both symmetrical and unsymmetrical voltage sags. The proposed scheme improves the reactive power injection capability of ST MV converter by the coordinated control of ST low voltage (LV) converter and battery energy storage system (BESS). This also isolates the ST LVAC side from the grid voltage sags and therefore, the loads and sources connected through ST are unaffected by the MV side faults. Simulation and experimental results are provided to show the efficacy of method.