This paper proposes a new space vector modulation (SVM) strategy based on MPC approach, where cost function is continuous time quadratic error between the reference and the actual current. To retain the advantages of the existing PWM schemes, similar constraints are imposed, and then the exact solution is found for the optimal switching angles in each modulation cycle. Compared to the existing PWM schemes, the presented MPC-based optimized SVM (MPC-OSVM) is based on continuous time cost function minimization. It does not make simplifying assumptions (e.g. purely inductive load) and accounts for exponential current variations. The paper proposed an algorithm for online implementation of the MPC-OSVM. The existing PWM strategies, such as standard SVM and carrier-based PWM with 3rd harmonic injection are compared to MPC-OSVM and re-evaluated. The paper presents extensive simulation results.