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The selective harmonic elimination PWM (SHEPWM) based on Walsh transform converts nonlinear transcendental equations in the Fourier domain to linear algebraic ones. Under appropriate initial condition, the piecewise linear relation between fundamental voltage amplitude and switching angles is obtained, so voltage regulation and harmonic elimination can be realized online. Thus, the technique highly suits to the inverter of dynamic voltage restorer (DVR). In the paper, the sameness and the difference between switch angles distribution of SHEPWM and of centroid PWM (CPWM) are summarized, and, according to the relationship between both PWM modes, a new method to solve SHE equation in Walsh domain is proposed. Based on the feature of harmonic distribution of the SHEPWM pulses, the paper presents design principle of inverter filter. The experimental result of 200 kVA DVR using SHEPWM indicates that the inverter can effectively restrain the harmonics and has good dynamic performance in all the range of output voltage.