The transformerless inverter for grid-connected photovoltaic (PV) system has been an increasing interest from researchers because of the benefits of smaller size, lower cost and higher efficiency compared with the ones which have transformer. However, the leakage current which resulting in transformerless inverter because of the absence of galvanic isolation must be eliminated. In this study, a novel single-phase transformerless multilevel inverter for grid-tied PV systems is proposed. The proposed inverter can reduce the leakage current. A suitable sinusoidal pulse width modulation (PWM) is modified to utilize with the proposed inverter to produce five-level output voltage. The structure of the new circuit and its principle of operation with the modified modulation strategy are illustrated in this paper. A simulation of the proposed inverter included in grid-tied PV system with a convenient control system have been built in MATLAB/Simulink software to verify the theoretical explanations. Finally, a prototype is tested to verify the theoretical analysis and main contributions of the study.