In this paper, a new modulation method is proposed for a Z-source three-level T-type inverter (3LT<sup>2</sup>I). The Z-source 3LT<sup>2</sup>I combines the merits of the Z-source two-level inverter and the advantages of the Z-source neutral-point-clamped inverter. Although the previous literature has proved that the space vector modulation (SVM) technique for Z-source 3LT<sup>2</sup>I produces the desired voltage transfer gain with minimized switching loss, it cannot deal with the neutral-point (NP) potential balance issue. Therefore, an improved SVM method addressing this problem for Z-source 3LT<sup>2</sup>I is proposed. The method simplifies the space-vector diagram of a Z-source 3LT<sup>2</sup>I into that of a Z-source two level inverter. In order to obtain NP potential balance, the pattern of the conventional symmetric SVM is changed by properly adding or subtracting a percentage of the minimum gate-on time. The upper and lower shoot-through states can be inserted into the improved symmetric SVM, thus offering av few advantages, including boosting ability, NP potential balance, and low switching loss. The considerate stable NP voltage and the boosting gain have been experimentally proven by results from a prototype inverter.