With the development of the technologies, the demand for good quality of electric power is increasing day by day. In Distributed Generation Systems (DGs), the quality of power can cause serious problems such as sensitive equipment's malfunction, the temperature rise of machines. Therefore, detection of power quality events in the power system is more important to take further actions. The existing power quality events classification methods have high computational time with low accuracy. In order to overcome this problem, this paper presents Discrete Packet Wavelet Transform -Kalman filter based Adaptive Neuro-Fuzzy approach for identification and classification of PQ events. The proposed method classifies the events with better classification accuracy, less convergence time and low in error prediction. The results show that the proposed method has better performance compared with the existing classification methods. The proposed method is Implemented and tested using MATLAB and it provides more accuracy when compared to the existing systems such as Discrete Wavelet Transform based Fuzzy Logic Adaptive System and Fourier Transform based Artificial neural networks etc..