The single-phase five-level transformerless inverters have been gradually applied in photovoltaic grid-connected systems due to low voltage stress and excellent waveform quality. However, they also suffer from serious leakage current as conventional three-level inverters. In order to reduce the leakage current, a single-phase five-level transformerless inverter is proposed in this article. The proposed inverter guarantees that the common-mode (CM) voltage is clamped to a half of the dc-link voltage when outputting ±Vdc/2 and zero voltage levels. Consequently, the high-frequency CM voltage is avoided and the leakage current is suppressed. The voltage stresses of eight switches and two flying capacitors are only Vdc/4, thus the system investment cost and total losses are reduced. The conduction and switching losses are analyzed in detail and a comparison with some existing topologies is also made. Finally, simulations and experiment are carried out based on a 1-kW prototype. The results show that the proposed single-phase five-level inverter can obtain both excellent differential-mode and CM performance.