This paper describes a new algorithm for optimal control of a PV system under partial shading. A multilevel DC-link is the essential part of the proposed system and its control engages a voltage-hold perturbation and observation (VH-P&O) method combined with a PWM algorithm with permutation of PV sources. The algorithm enables achieving the maximum power generation for any number of PV and converter modules. The main features of the control are: (i) a continual operation of all PV sources, shaded and non-shaded, at their maximum power points, (ii) delivery of all extracted power from PV sources to the load and (iii) generation of multilevel output voltage waveform with a low total harmonic distortion. (C) 2016 Elsevier Ltd. All rights reserved.