This paper presents a novel dc/ac converter topology with a high frequency transformer-link for three-phase adjustable magnitude and frequency PWM ac drives. Such drives find wide range of applications including UPS systems and drives involving renewable energy sources like solar and fuel cells. One recent potential area of application is renewable energy sources like wind or wave connected with HVDC grid. Here power conversion is single stage and bidirectional. Use of high frequency transformer results in high power density. The proposed topology minimizes the number of switching transitions between the transformer winding and the load and hence reduces common-mode voltage switching and improves the quality of the output voltage waveform. A novel modulation technique presented in this paper results in minimum common-mode voltage switching. A lossless source based commutation method has been developed to commute the energy stored in the leakage inductances of the high frequency transformer. This method also results in soft switching (ZCS) of all four-quadrant switches in the load side converter. The proposed converter has been analyzed and simulated. The presented simulation results verify the operation of the proposed topology.