This paper describes a SVPWM overmodulation scheme of NPC type three-level inverter for traction drives which extends the modulation index from MI=0.907 to unity. SVPWM strategy is organized by two operation modes of under-modulation and over-modulation. The switching states under the under-modulation modes are determined by dividing them with two linear regions and one hybrid region the same as the conventional three-level inverter. On the other hand, under the over-modulation mode, they are generated by doing it with two over-modulation regions the same as the conventional over-modulation strategy of a two level inverter. Following the description of over-modulation scheme of a three-level inverter, the system description of a vector controlled induction motor for traction drives has been discussed. Finally, the validity of the proposed modulation algorithm has been verified through simulation and experimental results.