This paper presents a three-phase transformerless uninterruptible power supply (UPS) with sinusoidal pulse width modulation (SPWM) based division-summation (D-Sigma) digital control. A transformerless UPS controls the power flow between dc link and utility grid, as well as tracks the ac reference voltage. The proposed control law derived with D-Sigma digital approach takes into account the effects of dc-link voltage fluctuation, grid-voltage distortion and inductance variation due to different current levels. Thus, distortion of input current and filter inductor core size can be reduced significantly. However, circulating current may flow through the common ground between the input power factor corrector (PFC) and the output three-phase four-wire inverter. The derived control law based on SPWM can suppress this circulating current and regulate output voltages tightly. Experimental results measured from a three-phase transformerless UPS have confirmed the analysis and discussion of the proposed control approach.