Due to the discrepancy of paralleled inverters, the zero-sequence circulating current (ZSCC) is a critical issue in a paralleled inverter fed permanent magnet synchronous machine (PMSM) drive system. The conventional solution to this issue is to adjust the duration of two zero vectors, however, will not be appropriate under the discontinuous space vector pulse-width modulation (DSVPWM) control using only one zero vector. For overcoming the above issues, an active vector modification based ZSCC suppression and a two-step sector indexing based DSVPWM are proposed in this paper. It uses both reference voltage and current vectors to jointly determine the drive signals in a two-step manner, which avoids the circulating current jump due to the coexistence of different zero vectors and can also reduce the switching loss by 50% in theory. Meanwhile, the low-frequency ZSCC can be online suppressed by a proposed real-time modification of durations of active vectors, which is finally verified together with the proposed two-step sector indexing method on a PMSM fed by two paralleled inverters.