In this paper a novel packed U cell (PUC) based multilevel grid connected inverter is proposed. Unlike the U cell arrangement which consists of two power switches and one capacitor, in the proposed converter topology a lower DC power supply from renewable energy resources such as photovoltaic arrays (PV) is used as a base power source. The proposed topology offers higher efficiency and lower cost using a small number of power switches and a lower DC power source which is supplied from renewable energy resources. Other capacitor voltages are extracted from the base lower DC power source using isolated DC-DC power converters. The operation principle of proposed transformerless multilevel grid connected inverter is analyzed theoretically. Operation of the proposed multilevel grid connected inverter is verified through simulation studies. An experimental prototype using STM32F407 discovery controller board is performed to verify the simulation results.