A fault tolerant single phase five level inverter is proposed in this paper for islanded photovoltaic (PV) generation system. The topology has the capability of maintaining same output voltage magnitude in case of switch open circuit fault and/or source open or short circuit fault with slightly reduced number of voltage levels. This helps in supplying uninterruptable power to essential loads even under fault condition. The topology also has the major advantage of energy balancing between two batteries using redundant switching states. This helps in reducing difference in state of charge (SOC) of batteries during partial shading or hotspots on PV panels. The fault tolerant single phase five-level inverter is simulated using MATLAB/SIMULINK and results are verified with laboratory prototype. © 2015 IEEE.