The inverters are categorized according to the configuration of the PV system, the configuration of the conversion stages within the inverter and whether they use transformers. After the introduction of the state of the art of inverters for PV systems with and without transformers, the paper focuses on some known problems and challenges for transformer less inverters. Topologies without transformers have big advantages like low weight, volume and cost. In addition they often reach higher efficiencies than topologies with transformers.Eliminating the leakage current is one of the most important issues for transformer less inverters in grid-connected photo voltaic system applications, where the technical challenge is how to keep the system common-mode voltage constant to reduce the leakage current. To realize better utilization of PV modules and maximize the solar energy extraction, a distributed maximum power point tracking control scheme is applied to both single- and three-phase multilevel inverters, which allows independent control of each dc link voltage.