This thesis proposes a novel approach to power electronics system design that is based on the open-architecture distributed digital controller and modular power electronics building blocks (PEBBs). The proposed distributed digital controller partitions the controller in three levels of control authority. The power stage controller, designated as hardware manager, is responsible for low-level hardware oriented tasks; the high level controller, designated as applications manager, performs higher-level application-oriented tasks; and the system level controller handles system control and monitoring functions. Communications between the hardware-oriented controller and the higher-level controller are implemented with the previously proposed 125 Mbits/sec daisy-chained fiber optic communication protocol. Real-time control and status data are communicated by means of communication protocol. The distributed controller on the power converter level makes the system open, flexible and simple to use. Furthermore, this work gives an overview and comparison of current state-of-the-art communication protocols for real-time control applications with emphasis on industrial automation and motion control. All of the studied protocols have been considered as local area networks (LAN) for system-level control in power converter systems. The most promising solution has been chosen for the system level communication protocol. This thesis also provides the details of design and implementation of the distributed controller. The design of both the hardware and software components are explained. A 100 kVA three-phase voltage source inverter (VSI) prototype was built and tested using the distributed controller approach to demonstrate the feasibility of the proposed concept. / Master of Science