In this paper, implementation of simulation based method for harmonic reduction in solar operated system, MATLAB Simulink Software is used to do simulation T.H.D analysis is carried out not only for output load voltage but also for Active and Reactive Power. This proposed work presents the design and implementation of novel multilevel inverter technique for the solar panel. For Conversion of Voltage from DC to AC two level cascade inverters are mostly used. This two level inverter can only able to produce two different outputs or level of voltages. But THD of 2-level inverter is not so good i.e. very high, because an output voltage waveform is in the form of two levels only, to limit and reduce THD value here new multilevel inverter is presented with less number of switches. THD analysis of conventional two level and new multilevel inverter is also presented here. Pulse width modulation technique is used and explained in details. The desired AC voltage is synthesizing by using various levels of DC voltages source.