A power converter and a PWM controller for compensating a maximum output power includes a power switch, an oscillator, a control circuit and a delay modulator. The oscillator generates a pulse signal. The control circuit is coupled to the oscillator for generating a PWM signal and an over current signal in response to the pulse signal and a current sense signal of the power converter. The delay modulator is coupled to the control circuit for generating a delay control signal in response to the PWM signal and the over current signal, wherein the delay control signal is used to prolong a propagation delay time of the control circuit in response to the on-time of the PWM signal, and the propagation delay time can be compensated by the on-time of the PWM signal to limit the maximum output power under a high-line input voltage and a heavy-load condition.