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The objective of this paper is to investigate the optimal common-mode voltage reduction pulsewidth modulation (PWM) technique when dead-time effect is taken into account. The effect of dead time on common-mode voltage for inverter control and the associated solution are discussed. Based upon these results, an optimal common-mode voltage reduction PWM technique, which requires no extra voltage/current sensors and compensation mechanism while not being affected by the dead time, is recommended. The common-mode voltage can be reduced to one-third for the inverter with diode front end, which is widely used in industry. Intensive measured results are presented to fully support the claims.