This study presents the analysis, design, and implementation of a photovoltaic (PV) inverter for residential applications based on interleaved flyback topology operated in discontinuous current mode (DCM). It is expected that the use of solar energy in small electric power system applications will increase largely when the cost of the PV panels and the energy conversion equipment becomes economical for every user. Therefore, the objective of this study is to develop a low-cost inverter system. The cost reduction is achieved by selecting the lowest cost converter topology, simplifying the control system, and making a compact and small size converter. The selected topology and the operating mode are known to yield the lowest component count and so the lowest cost. The paper first performs analysis and design on a 1 kW system then obtains the PLECS and the Simulink models for simulation. Later, using the simulation results, the inverter design and the controller performance are verified and optimized for the given specifications. Lastly, a full-scale prototype is built and evaluated under realistic conditions. Based on the experimental results, the implemented design and the controller can extract the energy from the solar panels with 97% efficiency and transfer it to the grid with high power quality and with 86.14% static efficiency at full load. The total harmonic distortion (THD) of the grid current is measured as 3.68% and the power factor is very close to unity. Consequently, the experimental results demonstrate that the proposed inverter system and its design perform successfully and comply with the existing PV inverter specifications.