A current-error space-vector-based PWM hysteresis controller is proposed for three-level voltage source inverter fed induction motor drive applications. A hexagonal boundary for the current-error space vector is formed by sensing the current-error space vector along three different axes, which are 120° apart and are orthogonal to machine phase axes. Only the adjacent inverter voltage vectors forming a triangular sector, in which tip of the machine voltage vector lies, are switched to keep the current-error space vector within the hexagonal boundary. Selection amongst the three nearest voltage vectors is done by a simple region detection logic in all the sectors. Calculation of the machine voltage vector is not needed and information of the same is indirectly derived from the direction of current-error space vector. The controller uses a self-adaptive sector identification logic, which provides smooth transition between sectors (voltage levels), including over modulation region up to 12-step mode of operation. Inherent advantages of current hysteresis controller are retained with the added advantage of adjacent voltage vector selection for hysteresis PWM control. Simple look-up tables are only needed for sector and vector selection, based on the hysteresis controller output, for the proposed hysteresis PWM controller. Experimental verification is provided by implementing the proposed controller on a 1.5 kW open-end winding induction motor drive. The proposed controller can be extended for further levels of multi-level inverters for high-performance drives by constructing suitable look-up tables.