This paper proposes a high-efficiency two-stage three-level grid-connected photovoltaic (PV) inverter. The proposed two-stage inverter comprises a three-level step-up converter and a three-level inverter. The three-level step-up converter not only improves the power-conversion efficiency by lowering the voltage stress but also guarantees the balancing of the dc-link capacitor voltages using a simple control algorithm; it also enables the proposed inverter to satisfy the VDE 0126-1-1 standard of leakage current. The three-level inverter minimizes the overall power losses with zero reverse-recovery loss. Furthermore, it reduces harmonic distortion, the voltage ratings of the semiconductor device, and the electromagnetic interference by using a three-level circuit configuration; it also enables the use of small and low-cost filters. To control the grid current effectively, we have used a feed-forward nominal voltage compensator with a mode selector; this compensator improves the control environment by presetting the operating point. The proposed high-efficiency two-stage three-level grid-connected PV inverter overcomes the low efficiency problem of conventional two-stage inverters, and it provides high-power quality with maximum efficiency of 97.4%. Using a 3-kW prototype of the inverter, we have evaluated the performance of the model and proved its feasibility.