Abstract: Transformerless grid-connected inverter（TLI） systems feature high efficiency, low cost, low volume and weight due to using neither line-frequency transformers nor high-frequency transformers. Therefore, TLIs have been extensively investigated in academic community and commonly installed in renewable energy industry, especially for distributed photovoltaic grid-connected systems during the decade. This paper analyzed and summarized the state of the art of TLI techniques. Three rules of leakage current（LC） suppression have been concluded from a generic common-mode（CM） voltage analysis model at the beginning. Secondly, LC suppression topologies and direct current（DC） injection methods, so called as two key challenges of first generation TLIs, have been classified and discussed in detail. Finally, some challenges and future trend of next-generation TLIs have been presented based on wide bad gap devices.