This paper presents the control of a photovoltaic distributed generation system based on dual-stage topology of DC-DC boost converter and three-level neutral-point-clamped (NPC) voltage source inverter (VSI). Decoupling control strategy of three-level VSI is proposed to control the current injected into the grid, reactive power compensation, and DC-link voltage. The resulting system is able to extract the maximum power from photovoltaic generator, to achieve sinusoidal grid currents, and to ensure reactive power compensation. The voltage-balancing control of two split DC capacitors of the three-level VSI is achieved using three-level space vector modulation with balancing strategy based on the effective use of the redundant switching states of the inverter voltage vectors. The proposed system performance is investigated at different operating conditions.