The present work proposes a simple cost effective multilevel topology for generating high quality sinusoidal AC waveform based onmulti-tapped multi-winding transformer switching technique. Multi-winding multi-tapped transformers are used to aid the multi-level switching process which guarantees a large number of intermediate switching levels. Each secondary tapping can act as a separate DC source derived from the single DC supply input to feed the second transformer. The proposed topology can generate 27 switching states by using only 8 switches and 3 full bridge diode rectifiers. The basic working principle is based on the selective addition and subtraction of magnetic flux in the transformer core. Although the mathematical modeling of multi-winding multi-tapped transformer is slightly complex, the resulting circuit complexity reduces when compared to the conventional topologies like diode clamped, capacitor clamped and cascaded multilevel inverters. The present work uses PSPICE and MATLABmodeling techniques to simulate the entire system using synthesized multi-winding multi-tapped transformer models. Also the proposed system has superior quality performance characteristics when compared to the conventional topologies, due to its ability to avoid major drawbacks like capacitor voltage unbalancing, common mode voltage stresses at the load end and the requirement of large filters to avoid the presence of harmonic frequencies at the output.