SummaryThis paper proposes a three‐level three port isolated converter (3L3PIC), which can be employed as an intermediate power conversion circuit for connecting different DC bus voltages in a DC microgrid. This topology utilize half bridge multilevel structure to reduce voltage stress across the transformer windings and the semiconductor switches. Conventionally the power transfer between the ports of a 3PIC were attained by traditional phase‐shift modulation (TPM), but this will impose increased current stress and associated losses in the converter at wide change in voltage conversion ratio. To minimize these losses, this paper introduces a 3L3PIC, that is, by employing dual phase‐shift modulation (DPM) in 3PIC. Steady state analysis of 3L3PIC are presented and derived the power transfer equations between the ports. The current equations through each port are determined at different combinations of voltage conversion ratios. Procedure for obtaining optimized phase‐shift values for both TPM and DPM techniques in 3PIC are explained. A comparison between the modulation schemes in 3PIC is performed and found better results for the DPM technique in terms of reduced current stress, reduced circulating power flow, and extended soft switching region. This in turn leads to a reduction in conduction losses and transformer losses in the converter. A hardware prototype of 1.5 kW 3PIC has been implemented and tested. The experimental results obtained validates with the theoretical analysis.