Induction motors are becoming the most widely used motors in the industrial environments. Industry has begun to use higher power ratings, and multilevel inverter drives have become a solution for high-power applications in recent years. A multilevel inverter not only achieves high-power ratings but also enables the use of renewable energy sources. Renewable energy sources such as photovoltaic, wind, and fuel cells can be easily interfaced to a multilevel converter system for a high power application. There are many faults occurring in the multi-level inverter, in which if the type of fault and the location of the fault are known then it will be easier to clear the faults. Therefore in the proposed work a fault diagnosis method is been implemented using the discrete wavelet transform method. In this proposed work to diagnose the faults in the multi-level inverter, the output current and voltage signals of the multi-level inverter is analyzed simultaneously in both the time and frequency domains by using the discrete wavelet transforms. The discrete signal of the stator current is decomposed up to the eighth level of resolution of the discrete wavelet transforms using selected mother wavelet. The eight level of frequency band values is useful in analyzing the signals in both time and frequency domains. The simulation of this circuit is implemented by using the MATLAB software.