The five-level inverters are preferred solutions for medium-voltage PV applications because of lower total harmonic distortion (THD), lower switching stress and lower electromagnetic interference in contrast to two-level inverter topologies. In order to reduce the leakage current in the five-level inverter applications, a single-phase five-level transformerless inverter topology is proposed in this paper. The proposed inverter is based on an flying capacitor (FC) configuration and the voltage of FC can be balanced through the coordination of the two half-bridge within a switching period. Two bidirectional circuits are added to provide the new freewheeling paths when outputting zero voltage level. The mechanism of suppressing the leakage current is analyzed in detail with operational states and modulation strategy. A 1 kW prototype is also built and tested in the laboratory, the experimental results are finally presented to show the excellent performance in leakage current reduction.