We present a general position-space renormalization-group approach for systems in steady states far from equilibrium and illustrate its application to the three-state driven lattice gas. The method is based upon the possibility of a closed form representation of the parameters controlling transition rates of the system in terms of the steady state probability distribution of small clusters, arising from the application of the master equations to small clusters. This probability distribution on various length scales is obtained through a Monte Carlo algorithm on small lattices, which then yields a mapping between parameters on different length scales. The renormalization-group flows indicate the phase diagram, analogous to equilibrium treatments. For the three-state driven lattice gas, we have implemented this procedure and compared the resulting phase diagrams with those obtained directly from simulations. Results in general show the expected topology with one exception. For high densities, an unexpected additional fixed point emerges, which can be understood qualitatively by comparing it with the fixed point of the fully asymmetric exclusion process.