A method and a system for diagnosing an open circuit (OC) fault of an insulated gate bipolar transistor (IGBT) of a T-type three-level (T23L) inverter under multiple power factors based on instantaneous current distortion are provided. Similar characteristics of current distortion may be caused by an OC fault of a T23L inverter, making it is difficult to locate the fault. The method for diagnosing an OC fault of a grid-connected T23L inverter, can diagnose the OC fault hierarchically; four switch transistors in a phase can be divided into two groups according to the similarity analysis of current distortion under different power factors; group-based fault diagnosis is realized by half cycles in which a zero domain occurs; and then, a specific switching signal is injected to realize equipment-based OC fault diagnosis. The OC fault diagnosis of a T23L inverter is realized without additional hardware circuits.