In this article, a virtual space vector based overmodulation algorithm is presented for three-level neutral-point (NP) clamped converters in high-speed aerospace motor drives. With the proposed inscribed polygonal-boundary compression technique, the output voltage capability is enhanced under a lower crossover angle and compression coefficient. As a result, it brings an opportunity for the operation of the studied aircraft electric starter/generator (ESG) systems easily extending from the linear modulation range into the overmodulation region. Furthermore, an active capacitor voltage balancing control method is investigated to recover NP potential imbalance in the case of high modulation index and low power factor operating conditions. To simplify the digital implementation of the algorithm, a fast calculation approach is adopted in this work. The modulation performance of the proposed strategy is verified by both simulation and experimental results with a 45 kW, 32 k r/min ESG prototype system.