This study presents an optimum control scheme to maximize the output voltage level number of the cascaded H-bridge dynamic voltage restorer (CHB-DVR). The relationship between the modulation index and the output voltage level number is analyzed in detail. The compensation reference voltage value is adjusted with the voltage drop depth to obtain high-quality output voltage with an acceptable total harmonic distortion. Thus, the modulation index remains within a certain range and thus meets the requirements of the maximum level number technique (MLNT). In addition, an improvement method based on the MLNT is proposed to achieve minimum active power absorption from a direct current link of the CHB-DVR. The traditional in-phase compensation and optimum control strategies are implemented to analyze the output voltage quality for verifying the feasibility of the proposed approach. Simulation and experimental results show the effectiveness of the proposed control scheme.