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A single-phase cascaded H-bridge multilevel inverter for a grid-connected photovoltaic (PV) system with nonactive power compensation is presented in this paper. To maximize the solar energy extraction of each PV string, an individual maximum power point tracking (MPPT) control scheme is applied, which allows the independent control of each dc-link voltage. A generalized nonactive power theory is applied to generate the nonactive current reference. Within the inverter's capability, the local consumption of nonactive power is provided to realize power factor correction. A single-phase modular cascaded multilevel inverter prototype has been built. Each H-bridge is connected to a 195 W solar panel. Simulation and experimental results are presented to validate the proposed ideas.