This paper proposes an improved scheme of hysteresis voltage control for a three-level dynamic voltage restorer (DVR) application. The basic three-level hysteresis controller offers advantages including ease of implementation and good dynamic performance, but the switching frequency is subjected to wide variation. Also, the maximum frequency may exceed tolerable limits, as the width of the voltage band becomes narrower. The improved three-level switching scheme overcomes the above drawback and results in a reduced switching frequency and lower switching losses. The suggested scheme also results in reduced stress levels on the switches. Detailed analysis and simulation study have been carried out using PSCAD software.