Parallel-connected inverters are gaining attention for high power applications because of the limited power handling capability of the power modules. Moreover, the parallel-connected inverters may have low total harmonic distortion of the ac current if they are operated with the interleaved pulse-width modulation (PWM). However, the interleaved PWM causes a circulating current between the inverters, which in turn causes additional losses. A model describing the dynamics of the circulating current is presented in this study which shows that the circulating current depends on the common-mode voltage. Using this model, the circulating current between two parallel-connected inverters is analysed in this study. The peak and root mean square (rms) values of the normalised circulating current are calculated for different PWM methods, which makes this analysis a valuable tool to design a filter for the circulating current. The peak and rms values of the circulating current are plotted for different PWM methods, and a discontinuous PWM is identified which offers the minimum peak and rms value of the circulating current. Experimental results are presented to verify the analysis.