In this paper, the application of a cascaded multilevel inverter as a dynamic voltage restorer (DVR) is investigated. Two discontinuous multilevel space vector modulation (SVM) techniques are implemented for DVR control and are shown to reduce inverter switching losses while maintaining virtually the same harmonic performance as the conventional multilevel SVM at a high number of levels. This paper also presents a mathematical relationship for computing the distortion at the point of common coupling (PCC) as a function of the distortion of the DVR. This enables the selection of the number of levels required for a certain application. An extended sag duration support compared to the two-level DVR is another advantage of the DVR with a cascaded multilevel inverter. The common-mode voltage (CMV) at the PCC has been evaluated for the three SVM techniques (the conventional multilevel SVM and the two discontinuous SVM), presenting a lower CMV for the second discontinuous SVM. A design example is presented for an 11-kV 5-MVA DVR multilevel cascaded inverter for up to 17 levels, employing the conventional multilevel SVM and the two discontinuous SVM techniques. © 2010 IEEE.