In this paper, an improved reference voltage decomposition method (RVDM) that takes account of neutral-point (NP) voltage balancing and common-mode voltage (CMV) reduction for neutral-point-clamped three-level converter (NPC-TLC) is proposed. Based on the analysis of space vector diagram (SVD), CMV is simply reduced by injecting zero-sequence voltages at two-level SVD. Then, according to the principle of adjusting zero-state duty cycles to change the NP current, the switching states of a certain phase or two phases are adjusted from two to three. Therefore, two improved methods that take the balancing control of NP voltage and the reduction of CMV into account are introduced and named method I and method II respectively. Both two proposed improved methods are simple in principle and easy to implement. Considering reliability and output performance, method II is selected as the improved strategy. Finally, the superiority of the improved strategy is verified by experiments, and experimental results are consistent with the theoretical analysis.