In high-power applications, parallel-operated T-type three-level pulse width modulation (PWM) rectifiers (T3LPRs) are widely employed to improve the power capacity and system reliability. For parallel-operated T3LPRs, there are two important issues need to be properly addressed: 1) the neutral-point potential (NPP) balancing, and 2) the zero sequence circulating current (ZSCC) between the common ac and dc bus. In this paper, the fluctuation of NPP in a T3LPR and the generative mechanism of ZSCC in parallel-operated T3LPRs are first investigated. The zero sequence voltage (ZSV) difference between the parallel-operated T3LPRs is identified as the main excitation source of the ZSCC problem. Meanwhile, the disconnection of the neutral point and the control effect difference of NPP balancing in each T3LPR also affect the ZSCCs within the parallel-operated T3LPRs. To adjust the ZSV of T3LPRs, the dwell time of the positive small voltage vector in each switching period of the converter, which is usually adjusted to balance the NPP, is also required to be controlled to suppress ZSCC. Therefore, in this paper, to avoid the possible conflict, an improved modulation mechanism is designed to guarantee simultaneous ZSCC suppression and NPP balancing. The neutral points of each T3LPR are connected. Then, by adjusting the dwell time of the positive small voltage vector, the charging time of two dc capacitors is adjusted to balance the NPP, and the ZSV differences between different T3LPRs are adjusted to suppress ZSCCs. To avoid the control effect difference of independent NPP balancing in different T3LPRs, all T3LPRs share the same value marking the difference between two dc capacitor voltages. Thus, a communication with a greatly reduced baud rate requirement is needed for NPP balancing to transfer the difference between the two dc capacitor voltages. Moreover, no extra circuit is needed for ZSCC suppression. These approaches make the proposed improved space vector PWM strategy much more practical and easy to employ. The proposed method is verified with experiments on two 3-kW T3LPR prototypes.