The static Var generator (SVG) is one of the new high technology devices with a promising future of applications due to advancements in power electronics and microelectronics technologies. It is an ideal device to stabilize the voltage and enhance the power factor for power system. Comparing with traditional two-level SVG, three-level SVG with neutral point clamped (NPC) topology has advantages of higher working voltage, larger output reactive current and lower device switching frequency. In this paper, direct power control (DPC) strategy focusing on instantaneous output power is research in detail and a novel switching table of direct power control strategy for three-level SVG is proposed. With the theory of instantaneous reactive power, it gets the inner relationship between instantaneous power (active power and reactive power) and space voltage vectors. The dc-link voltages are maintained at the required level using hysteresis controller for the NP current exploiting the redundancy states. With the switching table proposed in this paper, the excellent dynamic and transient performances of three-level SVG are achieved without abnormal instantaneous active power fluctuation. Simulation results verify the validity and feasibility of the proposed strategies.