This paper proposes an improved control strategy to eliminate dc circulating current in the paralleled uninterrupted power supply (UPS) systems. The active and reactive power control has good performance on restricting ac circulating current. However, it is unable to suppress dc circulating current effectively. Based on conventional active and reactive power control for load sharing in paralleled UPS systems, a dc circulating current suppression loop is introduced to each paralleled inverter module, which is used to eliminate the dc component of output voltage in each paralleled inverter module. The dc circulating current control is decoupled since each inverter module only regulates its own dc component. The proper design of multiloop controller parameters for the dc suppression loop ensures excellent steady-state and dynamic performances. The proposed dc circulating current suppression method is verified by experimental results of a paralleled three-phase UPS inverter system.