The selection and sizing of the dc-bus capacitor for applications utilizing three-phase PWM operated voltage source inverters (VSIs), such as grid connected photovoltaic systems and motor drives are presented based on the spectral characteristics of the dc-bus current. The characterization is provided for two and three-level VSIs (2/3L-VSIs) for popular PWM methods with modulation index (M-i) and the phase angle (phi) being variable. Based on the spectral characteristics, normalized dc-bus ripple current RMS values (K-dc) are obtained which are used to calculate thermal characteristics of the dc-bus capacitor. Similarly, the dc-bus voltage ripple characteristics are provided in a normalized manner so that they can be adapted to intended design for voltage ripple calculation. Then, considering the thermal and voltage ripple constraints, a thorough algorithm for dc-bus capacitor design is provided and illustrated through examples. The proposed approach constitutes simple and rigorous guide to design dc-bus capacitors for 2/3L-VSIs.