Among different types of transformerless photovoltaic inverters, multi‐level inverters based on switched‐capacitors (SC) are the burning topic of recent decades due to their potential advantages, such as, single source requirement, voltage boosting capability, and high power density. However, for a seven level output voltage, a conventional SC based inverter architecture uses more than two units of SC, a large amount of power switches, which then lead to capacitor voltage balancing problems. This paper presents a seven‐level switched‐capacitor transformerless inverter (SCTI), which is structured with only two SC units, ten power switches, and a single DC source. The proposed SCTI ensures voltage boosting capability, self‐voltage balancing, and low power semiconductor losses. Apart from these, a modified sinusoidal pulse width modulation (MSPWM) is also proposed in this work, which guarantees better thermal performance and low inverter output voltage THD for the proposed SCTI. The proposed SCTI along with the MSPWM is simulated in MATLAB/Simulink and PLECS computer simulation environments. A reduced scale laboratory prototype is also built and tested to ensure the feasibility of the proposed SCTI.