•A modified variable step-size P&O MPPT algorithm is proposed for PV systems.•Minimum oscillations by dividing the PV operating region into four sectors.•Proposed method increases system efficiency from 92.6% to 95.4%.•Proposed method reduces steady state oscillations by 9.2%. Conventional maximum power point tracking (MPPT) techniques such as Perturb and Observe (P&O) and Incremental Conductance (IncCond) are used in photovoltaic (PV) systems to extract the Maximum Power (MP). These algorithms cannot track the Maximum Power Point (MPP) under a rapidly changing insolation. This paper introduces a modified efficient variable step P&O (VSPO) algorithm as an attempt to solve the aforementioned problem. The VSPO technique divides the PV-array operation region into four operating sectors. With the help of these four sectors, the step-size is changed according to how the sector far from the MPP. The performance of the conventional and variable step algorithms P&O techniques is compared. Three-phase grid-tie inverter (GTI) is used to connect the system to the utility grid. MATLAB/SIMULINK software is used to study the validity of the modified technique. The results demonstrate that the VSPO algorithm attains the MPP faster than the conventional techniques and at reduced oscillation rate.