Problems such as occlusion and aging of photovoltaic modules can cause power imbalance between single-phase quasi-Z-source cascaded multilevel inverters. In severe cases, units with larger power will be over-modulated, resulting in grid-connected current distortion and even affecting system stability. To address this problem, a model of a single-phase quasi-Z-source cascaded multilevel inverter is analyzed, and the over-modulation mechanism and optimal third harmonic injection principle are expounded. An optimized third harmonic compensation control strategy is proposed. This method can not only ensure the maximum power output of the system and the balance of DC bus voltage between units, but also select the optimal third harmonic compensation coefficient according to the fitting curve, expand the operating range of the inverter, ensure that all units are not modulated when the power imbalance is serious. The effect of suppressing the grid-connected current distortion is evident. Simulation and experimental results verify the effectiveness of the proposed control strategy.